Fitch: UAE economy resilient amid regional challenges

Fitch Ratings said the UAE’s structural economic strengths support its resilience in the face of the fallout from the US-Iran war, while warning that regional instability is likely to persist and affect the wider region.

The agency said the UAE’s non-oil growth model has benefited from the country’s position as a hub linking Asia and Europe, supported by a favorable operating environment, supportive government policies, and its ability to attract and retain foreign workers and visitors.

Fitch expects further measures to improve the business environment and streamline administrative procedures for companies and residents, strengthening the UAE economy’s ability to withstand regional challenges.

These measures are expected to be accompanied by increased spending and additional financial support at both the sovereign and government-related entity levels, alongside the potential mobilization of substantial sovereign financial resources through entities with a domestic presence.

Under its baseline scenario, Fitch expects the UAE’s non-oil economy to grow by 6.1% in 2027, followed by 4.3% growth in 2028. However, the agency expects growth during this period to remain below the average recorded between 2022 and 2025, reflecting prevailing regional and global conditions.

Regarding credit ratings, Fitch said the UAE’s rating of 'AA-' with a stable outlook and Abu Dhabi’s 'AA' rating with a stable outlook are underpinned by exceptionally strong budgets. The agency believes both ratings have some resilience to developments affecting the non-oil economy, given the favorable tax environment.