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S&P Global Ratings has affirmed the long- and short-term sovereign credit ratings of the United Arab Emirates and the Abu Dhabi emirate at “AA/A-1+”, maintaining a stable outlook, reflecting the country’s strong economic and financial fundamentals.

The agency noted that the stable outlook is supported by the UAE’s substantial financial and external reserves, which provide the country with significant capacity to absorb potential geopolitical shocks. These buffers are complemented by considerable flexibility in the management of economic and fiscal policies.

According to the report, the strength of the government’s financial position remains one of the most important factors underpinning the high rating. The agency estimates the UAE’s combined government net asset position at approximately 184% of GDP in 2026, highlighting the country’s strong fiscal balance sheet.

S&P also emphasized that the UAE government enjoys a high degree of policy flexibility, enabling it to manage fluctuations in oil prices and respond effectively to temporary disruptions in production or export supply chains.

Potential Risks

The agency expects potential risks to remain limited, supported by the country’s diversified economic base and the availability of significant liquid assets and financial reserves that help sustain economic stability.

The report also highlighted the resilience and stability of the UAE banking sector, which has demonstrated strong performance in recent years. S&P does not anticipate significant government liabilities arising from the banking sector in the near term.

The sector is expected to benefit from the strong performance of the non-oil economy over the next two years. Lending growth is projected to remain robust, with credit expected to expand by 10% to 12% in 2026 and 2027, supported by ample liquidity within the banking system.

UAE banks also maintain net external asset positions, strengthening their ability to manage potential capital outflows in the event of heightened geopolitical tensions.

Overall, S&P Global Ratings expects economic stability in the UAE to continue over the next two to three years, supported by several key factors including strong sovereign assets, fiscal discipline, economic diversification, and a robust banking sector.