Good fundamentals to help UAE companies weather global uncertainty: S&P Global Ratings

Al Etihad

30-04-2025

30 Apr 2025 13:00
A. SREENIVASA REDDY (ABU DHABI)Good corporate fundamentals are expected to help UAE companies—and the economy at large—weather the global uncertainty triggered by tariff wars and geopolitical tensions, said S&P Global Ratings in a new report.In its latest analysis of the GCC corporate landscape, the report said that despite challenges stemming from rising trade protectionism, oil price volatility, and global economic fragmentation, the UAE remains one of the more resilient economies in the region. Its large, investment-grade-rated corporate base, access to competitively priced capital, and diversified economic base continue to provide a cushion against external shocks.S&P Global Ratings forecasts that the UAE's real GDP will grow by approximately 4.5% in 2025 and slightly above 4% in 2026. This places the country among the fastest-growing economies in the GCC. Growth is expected to be supported by ongoing expansion in the non-oil economy, including sectors such as tourism, real estate, retail, and logistics. The report cites strong domestic demand trends as a key driver, helped by structural reforms and continued investor confidence.Inflation across the GCC, including in the UAE, is projected to remain moderate at around 2% in 2025.The S&P Global Ratings reports that 61% of rated companies in the GCC hold investment-grade ratings, with a significant portion of them based in the UAE. These companies are viewed as having robust liquidity profiles, solid operating models, and prudent capital allocation strategies.Among the prominent UAE-based corporates covered in the report are Emirates Telecommunications Group (e&), which carries a rating of AA-/Stable; Emaar Properties, rated BBB+/Stable; Majid Al Futtaim Holding, at BBB/Stable; and Fertiglobe PLC, also rated BBB/Stable.The report also highlights that 46% of rated GCC corporates are government-related entities (GREs), which further strengthens the financial system. These entities benefit from state ownership, preferential access to resources, or contractual relationships with public institutions—characteristics that enhance creditworthiness. In the UAE, this relationship between government and enterprise has helped preserve financial stability and enabled corporates to pursue expansion strategies with confidence.Real estate remains a major pillar of strength in the UAE's economy. According to the report, residential demand in Dubai is expected to remain firm in 2025, supported by demographic growth and a strong pipeline of project launches. Pre-sales and revenue backlogs have provided companies with cash flow visibility, while developers continue to maintain strong balance sheets. Despite the potential for short-term corrections due to new supply, leading players in the sector are expected to remain profitable and resilient.S&P also pointed to continued momentum in the chemicals and telecommunications sectors. Fertiglobe, the UAE-headquartered nitrogen fertiliser producer, benefits from competitively priced gas feedstock, offering a cost advantage over global peers. In telecommunications, Emirates Telecommunications Group has been expanding into new verticals, including digital platforms and cloud services. The agency noted that while capital expenditure remains elevated in the sector, companies such as e& have the financial headroom to support ongoing investment without eroding credit quality.UAE corporates are expected to maintain solid access to financing, even in an environment of elevated global interest rates. S&P estimates that capital expenditure among rated GCC companies will remain between $30 billion and $35 billion annually. In the UAE, companies such as Emaar, Majid Al Futtaim, and e& have demonstrated strong refinancing capabilities and continue to benefit from favourable terms in both local and international capital markets. The report anticipates that many of these firms will return to bond markets in 2025 to refinance debt and support new projects.
While the report does outline potential downside risks—including prolonged trade disruptions, weaker oil prices, and regional security concerns—it emphasises that UAE-based corporates are generally well-prepared. 'While rising uncertainty clouds the global outlook, the credit quality of most rated GCC corporates—particularly in the UAE—remains strong,' the report said.