S&P Global Ratings has given a stable rating to the emirate of Abu Dhabi on expectations that its fiscal and external positions will remain strong over the next two years, supported by oil revenue.
Abu Dhabi's fiscal buffers of more than 250 percent of GDP underpin its creditworthiness, it said.
S&P expects economic growth to accelerate in 2022, largely due to increased oil production and higher oil prices, which indirectly support real GDP growth. “However, real GDP will only recover to 2019 levels by 2023,” it added.
Growth in the hydrocarbon sector, which provides Abu Dhabi about 50 percent of its GDP, will surge about 10 percent in 2022, averaging about 3 percent annually over 2023-2025.
According to S&P’s estimates, oil production will average 3.1 million barrels per day (bpd) in 2022, reaching about 3.4 million bpd by 2025.
The non-oil sector should expand about 2 percent annually, at a faster clip than it has in the pre-pandemic years. This will be supported by the state-oil producer ADNOC's planned capital expenditure of $121 billion through 2025.
Additionally, spillover effects from the FIFA World Cup in Qatar, with visitors potentially spending some time in the UAE, could also provide a boost to economic activity, the report said.
Regional geopolitical tensions will have a limited effect on Abu Dhabi, it said.
The large level of foreign reserves and government assets mean that the Central Bank of the UAE will maintain the dirham's peg to the US dollar, according to the ratings agency.
(Writing by Brinda Darasha; editing by Seban Scaria)