Abu Dhabi's Strong Balance Sheet To Provide Buffer Against Geopolitical Volatility: Report

(MENAFN- Khaleej Times) [Editor’s Note: Follow Khaleej Times live blog amid ** US-Israel-Iran war** for the latest regional developments.]

Abu Dhabi has substantial fiscal, economic, external, and policy flexibility which will act as an effective buffer against the impacts of regional conflict, S&P said in its latest report.

Recommended For You UAE’s e& announces special offers for customers affected by regional conflict Iranian attack hits hotel, 2 residential buildings in Bahrain; no casualties reported

The global ratings agency projected that the Abu Dhabi government will continue to run fiscal surpluses averaging 3.8 per cent of GDP until 2029, assuming Brent oil prices of $65 per barrel from 2026-2029.

It expects that regional war will recede after a few weeks, and a period of recovery will be enabled by the authorities’ strong balance sheet and willingness to resume stability.

** Stay up to date with the latest news. Follow KT on WhatsApp channels.**

Abu Dhabi owns and operates some of the world’s largest sovereign wealth funds.

Abu Dhabi Investment Authority owns $1.18 trillion in assets, followed by Mubadala at $358 billion and ADQ at $251 billion, among others.

Emirates Investment Authority, a sovereign wealth fund of the federal government of the UAE, controls $116 billion worth of assets.

All these SWFs provide a great amount of financial support to Abu Dhabi and the UAE.

In addition, Dubai also has sovereign wealth funds that own billions of dollars in assets which will provide a cushion during challenging times.

S&P has affirmed the UAE capital’s ‘AA/A-1+’ long- and short-term foreign and local currency ratings with a stable outlook.

“The stable outlook reflects our view that Abu Dhabi’s large fiscal and external buffers should provide a buffer for policy maneuvering in very adverse geopolitical developments or unfavorable hydrocarbon sector dynamics, including disruption in oil production or exports,” S&P analysts said.

S&P added that it could raise the ratings if geopolitical tensions ease sharply and the availability and timeliness of data disclosures, particularly on fiscal assets, contingent liabilities, and external accounts, improved significantly.

“Our ratings on Abu Dhabi remain supported by the government’s strong fiscal and external positions. The exceptional strength of the government’s net asset position (estimated at 358 per cent in 2026) provides a significant buffer to external shocks. The emirate has also shown a consistent capacity to navigate periods of stress, underpinned by a solid record of prudent policymaking. We believe this flexibility will enable the UAE to withstand the temporary disruption of oil production and export routes,” said S&P analysts.

The ratings agency expected Abu Dhabi’s medium-term growth to moderate, averaging 2.2 per cent over 2026-2029.

It estimated oil production to rise to an average of 3.3 million barrels per day (mbpd) over 2026-2027 compared with 3.14 mbpd in 2025.

The Institute of International Finance (IIF) said in its latest note that the Gulf region’s strong financial buffers - large sovereign asset holdings, low debt, conservative fiscal positions, well-capitalised banking systems, and durable dollar pegs - should mitigate solvency concerns.

ALSO READ

UAE leads Middle East growth despite oil and geopolitical headwinds

S&P flags regional credit strain, highlights UAE’s strong buffers

Fitch flags rating risks if Iran conflict drags on, sees UAE well positioned

MENAFN08032026000049011007ID1110832581