07/09/2026 04:01 AST
Qatar and the UAE retained their high sovereign credit ratings in separate assessments by Fitch Ratings and S&P Global Ratings, highlighting the financial strength of the Gulf economies even as the regional conflict continues to disrupt energy exports and trade.
Fitch affirmed Qatar's Long-Term Issuer Default Ratings at "AA" and removed the country from Rating Watch Negative, although it maintained a negative outlook because of continuing risks to liquefied natural gas exports and infrastructure.
The rating action reflects reduced risks of further severe damage to Qatar's LNG facilities since March, Fitch said, while warning that the broader impact of the conflict on the country's credit profile will take longer to assess.
In its latest report, Fitch said the "AA" rating reflects Qatar's high gross domestic product per capita, which is among the highest in the world, and its large sovereign assets. The ratings agency added that higher gas production is expected to further strengthen the country's public finances and support a relatively flexible fiscal position.
The affirmation follows a period of heightened regional tensions that disrupted shipping through the Strait of Hormuz, with Fitch warning that further damage to LNG infrastructure or prolonged disruption to hydrocarbon production and transport could negatively affect the country's rating in the future.
"The rating actions capture the risk from a further prolongation of the period in which Qatar cannot export LNG to the sovereign balance sheet, which has held up well so far," Fitch said.
Fitch expects Qatar's economy to contract 18.8 percent in 2026 because of lower LNG production due to the disruption in the Strait of Hormuz.
Non-oil growth is also expected to weaken, reflecting lower activity in downstream industries and fewer tourist arrivals.
The agency expects a sharp economic rebound as LNG flows normalize and production begins from the North Field expansion.
"A further ramping up of output from the North Field will underpin growth that will stay in double digits in 2028," said Fitch.
Potential rating upgrades could follow a reduction in hydrocarbon dependence, improvements in governance and a sustained decline in geopolitical risks, provided Qatar maintains strong fiscal and external balance sheets.
UAE rating affirmed at 'AA/A-1+'
Separately, S&P Global Ratings affirmed the UAE's long- and short-term foreign- and local-currency sovereign credit ratings at "AA/A-1+" with a stable outlook, citing the country's substantial financial and external buffers.
In its latest report, the credit rating agency said that the UAE's substantial fiscal, economic, external and policy flexibility continues to provide an effective buffer against regional and global shocks.
The analysis added that these strengths will help the Emirates absorb the effects of geopolitical tensions and any unfavorable hydrocarbon-sector developments, including possible disruption to oil production or exports.
This comes after Moody's affirmed the UAE's Aa2 long-term sovereign ratings with a stable outlook in June, citing the country's strong financial buffers, low federal debt and diversified economy despite disruptions to trade through the Strait of Hormuz.
In its latest report, S&P Global said: "Our base-case scenario remains that the opening of additional hydrocarbon export routes and a likely increase in oil production from 2027 could support the UAE's macroeconomic stability, despite elevated geopolitical risks."
It added: "The exceptional strength of the government's consolidated net asset position estimated at 147 percent of gross domestic product in 2026 provides a significant fiscal and external buffer to shocks. The UAE's general government debt is very low, estimated at about 26 percent of GDP in 2026, and we estimate its consolidated fiscal balance to average a surplus of 2.3 percent over 2026-2029."
The "AA" long-term rating places the UAE among the highest-rated sovereigns globally. The short-term rating of "A-1+" reflects the same underlying strengths and the country's ample external liquidity.
Conflict and downside scenario
S&P Global anticipates that the Middle East war will likely have economic implications for non-hydrocarbon sectors.
Non-oil sectors account for about 75 percent of the UAE's GDP, but their performance is expected to be muted in 2026 due to the war's spillover effects and disruptions to trade routes affecting tourism, transport and trade, as well as real estate and manufacturing.
"A recovery of non-hydrocarbon sectors depends on a lasting resolution to the war," S&P said, adding that a prolonged decline in tourist arrivals, exports and real estate demand could not be ruled out if security risks persist.
The agency also flagged the potential for capital outflows but said UAE banks' strong external positions would help them withstand such pressure.
S&P said the UAE's rating could be upgraded if geopolitical risks decline on a sustained basis and the country improves the availability and timeliness of UAE-wide and emirate-level fiscal and external data.
Arab News
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