Moody's Rating affirmation

Moody’s Investors Service affirmed the United Arab Emirates’ long‑term Aa2 issuer rating for both local‑currency and foreign‑currency obligations on 13 June 2026, maintaining a stable outlook. The agency also affirmed the foreign‑currency senior unsecured debt rating at Aa2 and the medium‑term note (MTN) program rating at (P)Aa2.

Rationale for affirmation

The affirmation rests on the UAE’s high per‑capita income, diversified economic structure, robust institutional framework, and a federal government debt burden that is described as very low. Moody’s assumes full financial backing from the Abu Dhabi government (Aa2 stable), whose financial assets were reported to exceed 300 % of its GDP at the end of 2025. The agency notes balancing factors such as elevated regional geopolitical risks from the ongoing Middle‑East conflict, a heavy reliance on hydrocarbon revenues, and certain disclosure shortcomings.

Economic outlook

  • 2026 real GDP is projected to contract by around 7 %, driven by a 23 % decline in hydrocarbon production and a 4 % contraction in the non‑hydrocarbon sector.
  • Moody’s expects oil prices to average US$90–110 per barrel in 2026; the reduced export volumes are expected to be partially offset by the Habshan‑Fujairah pipeline.
  • 2027 real growth is forecast to rebound 13 %, supported by the resumption of trade flows through the Strait of Hormuz and an 8 % recovery in the non‑hydrocarbon sector.

Fiscal position

The federal government entered the crisis with a surplus of 0.8 % of UAE GDP in 2025. Moody’s anticipates only a small deficit for 2026, with federal debt remaining very low at roughly 3–4 % of GDP. The government benefits from substantial fiscal reserves, access to the Emirates Investment Authority, and backing from the UAE Supreme Council.

Outlook stability and rating pressures

The stable outlook reflects Moody’s view that the UAE’s credit profile will stay resilient despite regional tensions, underpinned by strong fiscal and financial buffers. Upward pressure on the rating could arise if the UAE’s resilience to carbon‑transition scenarios materially improves or if regional geopolitical risks ease significantly. Downward pressure would emerge from an escalation of the conflict that threatens Abu Dhabi’s ability to produce and export oil, or from a decline in Abu Dhabi’s financial support to the federal government.