ABU DHABI (The Thursday Times) — Fitch Ratings has kept the UAE’s sovereign credit rating at AA- with a stable outlook, but expects the country’s non-oil economy to shrink by about 1.5% this year because of the Iran war.
The agency forecasts that the UAE’s real GDP will still grow by 0.5% in 2026, held up by a rise of about 7% in oil and gas output. It expects hydrocarbon output to jump by 26% next year now that UAE production is no longer capped by OPEC+ quotas. The UAE formally left OPEC in May.
“The stable outlook reflects demonstrated resilience of oil export revenues during the Iran war, which largely offsets the immediate negative impact of the war, as well as abundant fiscal and external buffers, and our expectation that individual emirates will bear the cost of the war rather than the federal government,” Fitch said.
Dubai still below 2025
Fitch said Dubai’s real GDP would stay below its 2025 level next year as the emirate recovers from the war. Dubai’s economy shrank by 2.3% from a year earlier to Dh473 billion ($128.8 billion) in the first half of 2026, official data showed last month, with growth in financial services, health care, and construction only partly offsetting weakness elsewhere.
“Fitch expects all the emirates will put recovery programmes in place, but non-oil trend growth will be below prewar levels over our forecast period,” the agency said.
The UAE as a whole grew by 0.4% to Dh961.9 billion in the first half, according to the Federal Competitiveness and Statistics Centre. Sheikh Mohammed bin Rashid Al Maktoum, the Vice President and Ruler of Dubai, said last week that the country’s foreign trade had reached close to a record Dh3 trillion in the first nine months of the year.
Abu Dhabi’s buffers
AA- is the fourth-highest grade on Fitch’s scale. The agency said the rating reflects low consolidated government debt, a strong net external asset position, and high income per head. It said Abu Dhabi’s sovereign net foreign assets, at an estimated 180% of UAE GDP this year, are among the highest of any sovereign it rates. Fitch rated Abu Dhabi itself AA in May.
It expects Abu Dhabi’s export revenue this year to be higher than it forecast before the war, because of higher crude prices and larger volumes shipped through the pipeline to Fujairah and through the Strait of Hormuz.
“Crude oil constitutes the bulk of exports, and we consider Abu Dhabi’s oil export infrastructure less vulnerable to long-term damage than more concentrated and bespoke downstream oil or liquefied natural gas plants,” Fitch said.
Anwar Gargash, the diplomatic adviser to the UAE President, welcomed the decision on X, saying it showed the strength of the national economy during the regional crisis.
The war has hit Gulf economies hard. Emaar’s founder, Mohamed Alabbar, said this week that visits to the company’s malls had fallen by 10%, and credit insurer Allianz Trade has estimated the war will cost Gulf economies $790 billion by 2030. For Pakistan, which counts the UAE among its biggest sources of remittances, the war has already cost $387 million in Gulf exports, the commerce secretary said this week.
