United Arab Emirates (UAE), a federation of seven emirates, derives its credit profile primarily from its large sovereign wealth funds, mainly held by the Abu Dhabi Investment Authority, which provide a significant buffer to the country’s fiscal and external profiles. Abu Dhabi, the largest and most creditworthy of the emirates, contributes about 65% and 96% to the total GDP and oil reserves of the UAE respectively.

Furthermore, the UAE remains one of the top preferred destinations for expatriates in the world. Despite these positives, the economy faces challenges like high dependence on hydrocarbons, exposure to regional geo-political risks, and limited monetary flexibility due to its fixed exchange rate regime.