Abu Dhabi demonstrates strong financial and external positions in S&P Global Ratings

The S&P Global Ratings agency confirms the “AA/Stable/A-1+” investment ranking of Abu Dhabi with a stable outlook. According to the company, the emirate will have a strong external position and a solid financial situation for the next two years under a prudent policy environment.

The agency’s report shows that Abu Dhabi’s budget reserves are equivalent to more than 350% of GDP, which supports the emirate’s credit solvency. The stability of the government’s balance sheet provides protection from external and fiscal factors, as well as from the impact of the geopolitical environment

S&P Global Ratings predicts that the net assets of the government will equal about 360% of GDP in 2023. The deficit financing is not expected until 2026.

In 2022 the emirate’s GDP surpassed AED 1.1Trn (USD 299.5B), which is 9.3% more than in 2021. According to the Chairman of the Abu Dhabi Department of Economic Development, (ADDED) half of these figures refer to non-oil sectors.

During the first nine months of 2022, Abu Dhabi’s economy showed an annual growth of 10.5%. This is the fastest increase in the MENA region, based on the Statistical Center of Abu Dhabi (SCAD). The share of the non-oil sector in the GDP has reached 50.3%.

There was also an 8.4% increase in activities that are not related to the hydrocarbon sector. Thus, the largest contribution was recorded by manufacturing at 8.2%, construction — 7.8%, financial and insurance business — 5.6%, management, and defence and social services — 5.5%.

Following the S&P Global Ratings agency’s forecasts, the non-oil sector will grow by 4% in 2023. During 2024–2026, this sector is expected to grow by about 3.5%, along with a government budget surplus during this period.

The UAE and Abu Dhabi, in particular, have taken steps to stimulate foreign investments and develop the business environment. This should increase the inflow of foreign professionals and investments, as well as make the employment market more flexible. The new measures include the foreign direct investment law in Abu Dhabi, which enables full foreign ownership of enterprises in various sectors.