Abu Dhabi (Emirate of)

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile Abu Dhabi has a very wealthy economy, but growth rates are volatile, since about 50% of economic output is derived from the hydrocarbon sector. Abu Dhabi's fiscal buffers of more than 300% of GDP underpin its creditworthiness. --S&P Global Ratings forecasts that Abu Dhabi's real GDP growth will accelerate to 8% in 2022 but be broadly flat in 2023 due to the latest OPEC+ agreement to cut oil production. --The emirate's fiscal government balance remains closely correlated to oil price and volume movements, notwithstanding the addition of new nonoil revenue streams such as value-added tax (VAT). --We expect regional geopolitical tensions will, on

...We expect Abu Dhabi's oil production to increase over the medium term as OPEC+ quotas are lifted and capacity increases to 5 million barrels per day (bpd) by 2030 from about 4 million bpd. Notwithstanding this assumption, we expect oil production to fall to about 3.02 million bpd on average in 2023 based on the October 2022 OPEC+ announcement, following an average of 3.08 million bpd in 2022. We expect oil production to rise again in 2024 (3.12 million bpd) and 2025 (3.22 million bpd). The exceptional strength of the government's balance sheet provides a buffer to counteract fiscal and external shocks, as well as the effects of high geopolitical uncertainty in the Gulf region. We estimate the government's net asset position at about 300% of GDP in 2022. We do not expect it to require deficit financing over the period to 2025. Nevertheless, on top of refinancing maturing debt, the government is likely to issue external debt of about $5 billion annually, given its aim of building a yield...

Full Report