United Arab Emirates

Country risk

Country risk in the United Arab Emirates is low. The OECD country credit grade is 2. The UAE has investment grade sovereign credit ratings from all three major private rating agencies. This suggests a relatively low likelihood that it will be unable or unwilling to meet its external debt obligations. That said, 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 business climate is ranked 16th out of 190 economies on the World Bank’s latest ease of doing business scorecard. The UAE outperforms the rest of the Middle East in all areas of the World Bank’s doing business categories. The UAE also performs well on most indicators relative to advanced economies, but lags on resolving insolvencies and trading across borders.

The risk of expropriation is low. There have been no reported cases of expropriation in the recent past.

Political risk in the UAE is low to moderate, and includes risks related to escalation of regional geopolitical tensions that could hinder trade and investment.

The UAE scores well on government effectiveness, rule of law, regulatory quality and control of corruption, implying high governance and strong institutional frameworks. However, as in many MENAP countries, the UAE scores in the lowest quartile for voice and accountability.