Country risk in the United Arab Emirates is low. The UAE enjoys a strong investment grade credit rating and OECD country credit grade of 2. This suggests a relatively low likelihood that it will be unable or unwilling to meet its external debt obligations in a systemic sense—though sub-sovereign entities and individual debtors can and do default. Indeed, Dubai experienced severe financial stress in the wake of its 2008-2009 property crash; but it managed to stave off default thanks to support from Abu Dhabi. Abu Dhabi’s economic weight tends to give it a dominant role in federal affairs over the other emirates. Most laws are based on Islamic principles.
The UAE’s current business climate is ranked 11 out of 190 economies on the World Bank’s ease of doing business gauge, which attempts to measure regulation and current barriers facing small to medium firms. The UAE outperforms the regional average in all of the World Bank’s ease of doing business categories, but still lags advanced economies when it comes to resolving insolvency and trading across borders.
The risk of expropriation is low. There have been no reported cases of expropriation within the last 5 years. The risk of political violence is low to moderate. The UAE scores well on government effectiveness, rule of law, regulatory quality and control of corruption suggesting solid governance. However, like most countries in the region, the UAE scores in the lowest
quartile for voice and accountability.