Moody's global credit rating agency, expected the UAE economy to recover strongly from the consequences of the Coved-19 pandemic, with real GDP recording an average growth of 4.1% next year (2021) after a contraction of 5% this year (2020).
The agency expects that the oil economy of the UAE to shrink as a result of the pandemic and the decline in oil prices globally by about 7.2% this year, to take off next year with a growth expected to reach 6.5%.
The agency revealed that there are several factors that support the credit rating granted to the UAE, which is stable Aa3, among them the huge financial assets of its sovereign funds, the extremely high per capita income, superior infrastructure, and huge oil reserves, in addition to the stability of the political situation and strong state relations globally. Indicating that the credit rating can be higher if there is more comprehensive disclosure about the size of the external assets.
The agency disclosed that the UAE's financial dependence on hydrocarbons reached 46% of the total government revenues within the combined government budget in 2019. It also showed that the UAE's efforts at the level of diversification of economic growth resources and reducing dependence on oil contribute to enhancing the stable outlook for its economy.
Moody’s discussed the effects of the pandemic and the sharp decline in oil prices in the UAE economy, indicating that the consequences of the situation will lead to a decline in oil revenues in the short term, likely to have limited repercussions on the country's credit rating.
Source (Al-Khaleej Newspaper-UAE, Edited)