Coface downgrades Saudi Arabia and Qatar risk assessments to A4, UAE to A3

Key Facts

Coface downgraded its risk assessments for Saudi Arabia, the United Arab Emirates and Qatar in its review published on 13 October 2026, as regional conflict exposes energy infrastructure and trade and export routes to risks. Saudi Arabia's assessment moved from A3 to A4, while the company downgraded the UAE from A2 to A3. Qatar's assessment also fell from A3 to A4, putting it at the same new level as Saudi Arabia. Coface's country risk assessment measures average corporate credit risk within a country, based on macroeconomic, financial and political data. The downgrades therefore concern corporate credit risk and are not downgrades of sovereign debt or government bond ratings. Coface identified Saudi Arabia's exposure to attacks and the UAE's and Qatar's reliance on the Strait of Hormuz among the direct factors behind the deterioration in the risk assessments.

In Saudi Arabia, Coface said in its review that the kingdom was "exposed to attacks on its energy infrastructure and most of its export routes", extending the risk to energy facilities and the routes through which exports pass. Alongside this exposure, the company warned in its country assessment of potential delays to economic diversification plans. It linked this to weak investor confidence as one of the factors threatening progress on those plans. It also listed the potential departure of foreign workers among the risks facing diversification, while keeping this possibility within the scope of its warning. It added declining tourist arrivals to the factors that could delay economic plans, extending its assessment to tourism and investment activity alongside risks to the energy sector and exports.

In the UAE, Coface linked the risks to disruption to shipping routes through the Strait of Hormuz and the resulting effects on supply chains. These effects include trade flows and logistics activity, according to the company's country assessment, broadening exposure beyond energy exports alone. The repercussions of shipping disruption also extend to fiscal and export revenues, which Coface listed among the areas affected. In the agrifood sector, the company identified the UAE's and Saudi Arabia's heavy reliance on food imports as a source of vulnerability. It said in its review statement that this vulnerability stemmed more from dependence on imported food than from any problems with domestic production, adding food imports to the channels of risk facing economic activity.

In Qatar, Coface identified the main vulnerability as "complete dependence on the Strait of Hormuz for hydrocarbon exports", according to its country risk assessment. This exposure is concentrated in the route for hydrocarbon exports, alongside financial strengths the company cited in the same assessment. These include relatively low public debt, one of the sources of resilience Coface listed for Qatar. It also pointed to strong public finances, adding the fiscal position to the Qatari economy's strengths. It also listed a well-resourced sovereign wealth fund among these factors, alongside low debt and strong public finances, despite the continuing vulnerability associated with the hydrocarbon export route.

The risk review comes against a backdrop of rising energy costs, which Coface addressed in its economic review. The company noted that oil prices exceeded the 100 dollar-per-barrel threshold in September. On Gulf economic activity, the World Bank forecast that Gulf Cooperation Council economies would contract in 2026. In its October regional economic update, it put the expected average contraction at 4.3%, pointing to a decline in activity across the bloc during the year. The regional picture thus combines oil exceeding that price threshold with an expected contraction in Gulf economies, while Coface's review focuses on risks facing corporate credit and trade and energy routes.

Globally, Coface expects economic growth of 2.5% in 2026, according to its review statement, compared with its forecast of 2.6% growth in 2027. The World Bank's regional recovery outlook, meanwhile, is conditional on the conflict subsiding by the end of 2026. If that condition is met, the bank expects growth to rebound across the Middle East, North Africa, Afghanistan and Pakistan in 2027. Growth would then reach 7.8%, according to the World Bank, in an estimate that excludes Iran. The conflict subsiding within that timeframe remains the basis for this regional recovery scenario next year.