High income levels and competitiveness underpin UAE's economic strength, Moody’s says
Real GDP growth is expected to accelerate to 3% by 2020
The stable credit profile of the UAE is supported by expectations of continuous financial support from the Abu Dhabi government, its superior infrastructure, very high per capita income and vast hydrocarbon reserves, Moody's said in its annual report on Friday.
“Our stable outlook indicates that the risks to the UAE's sovereign ratings are broadly balanced,” said Thaddeus Best, a Moody's analyst and the report's co-author.
“Its credit profile is supported by the stable outlook on the Abu Dhabi sovereign rating and upside potential from diversification efforts,” said Mr Best, adding that one of the areas that could hamper growth is geopolitical tension.
The UAE's fiscal reliance on hydrocarbons at an estimated 43 per cent of government revenue in 2018 and regional geopolitical tensions are sources of negative credit pressure, said Moody’s.
While real gross domestic product growth will remain modest in 2019 due to OPEC production cuts and subdued non-oil sector activity, Moody's expects real GDP growth to accelerate to 3 per cent by 2020. It will be supported by Abu Dhabi, which accounts for the largest share of government spending in the Emirates.
Reduced regional geopolitical tensions would be positive for the UAE's credit profile, particularly if combined with improvements in policy transparency and data availability at the emirate and federal level.
Updated: May 31, 2019 06:12 PM