The recent passing of UAE president Sheikh Khalifa bin Zayed al Nayhan is unlikely to alter the economic outlook with GDP set to grow rapidly amid stronger oil output and looser fiscal policy. Current president, Mohammed bin Zayed Al Nahyan, will face a number of challenges, including the country’s relationship with OPEC+, ensuring the UAE remains the region’s leading financial and logistics hub.
We greatly appreciate the fact that he has been involved in the government well before the official power transfer which is leading the way for the ongoing “business as usual”.
The decision last year by the UAE to introduce a corporation tax will help to diversify public revenues away from fossil revenues. Additionally, it may provide financially more exposed emirates more flexibility to address issues such as the resurfacing of corporate debt concerns.
The UAE consists of seven emirates issuing debt individually. The country’s Aa2 credit rating is underpinned by the assumed full backing of Abu Dhabi, the largest emirate, which enjoys a very strong balance sheet, backed by assets held by ADIA—the Abu Dhabi Investment Authority—equivalent to 145% of the UAE’s 2018 GDP. Other credit strengths include a history of domestic political stability, a high GDP per capita, and hydrocarbon reserves of more than 70 years at the current rate of production. A significant fiscal buffer remains in place to absorb short-term economic shocks.
The economy is fairly diversified, but growth and public finances still depend on hydrocarbon exports and oil-driven liquidity in the region
The credit outlook for the country is stable; the c8ountry’s economy is on a slow recovery path from the 2014–2017 oil shock and 2020–2021 COVID restrictions. Longer-term key risks to watch for include increasing economic competition from GCC neighbors, in particular Saudi Arabia, and debt levels of state enterprises.
GDP forecast 2024: 3.2 %