Moody's Affirms UAE at Aa2 Despite 7% 2026 GDP Contraction Forecast

3 articles · Updated · Arab News · Jun 14

Moody’s kept the UAE’s long-term sovereign rating at Aa2 with a stable outlook, even as it forecast real GDP will contract about 7% in 2026.
A 23% drop in hydrocarbon production and a 4% non-hydrocarbon contraction are expected to drive the downturn, with trade disruption through the Strait of Hormuz hitting confidence-sensitive sectors.
The agency said strong buffers still support the rating: federal debt is seen at 3% to 4% of GDP, the 2025 federal budget posted a 0.8% surplus, and Abu Dhabi’s financial assets exceeded 300% of its GDP.
Higher oil prices of $90 to $110 a barrel and export routes including the Habshan-Fujairah pipeline should partly cushion the shock, while tourism, logistics, transport and foreign investment face pressure.
Moody’s expects growth to rebound 13% in 2027 as trade resumes; it warned that damage to strategic infrastructure could pressure the rating, while lower geopolitical risk and stronger transparency could support an upgrade.