Global credit rating agency Standard & Poor’s has affirmed its ‘A/A-1’ long-and short-term foreign and local currency sovereign credit ratings on the Emirate of Sharjah. The agency also reaffirmed the stable outlook for Sharjah based on a low government debt burden, a diversified industrial base and continued robust economic growth. S&P began assigning sovereign credit ratings for the Emirate of Sharjah in 2014.
The strong market response to the Government of Sharjah’s issuance of its second US dollar Islamic bond in January underscored market confidence in Sharjah’s economy and fiscal management. The US$500 million (AED 1.8b) 5-year sukuk, which was the emirate’s second, was the first sovereign sukuk to be issued in 2016.
S&P forecasts that Sharjah’s real economic growth will remain relatively robust, although slowing against previous expectations in line with the agency’s changing oil price assumptions. The rating agency now expects economic growth to average 2.8 percent in 2016-2018 compared with the 3.5 percent forecast in its November 2015 review.
S&P reports that the four largest sectors in Sharjah’s economy are real estate and business services (accounting about 21 percent); manufacturing (16 percent); mining, quarrying, and energy (12 percent); and wholesale and retail trade (12 percent). Despite a slowdown in the mining and energy sector, the agency expects to see continued growth across all other economic sectors in the emirate.
Sharjah has rolled out a wide range of initiatives to help develop the local economy and encourage inward investment. The government allocated 45 percent of its 2015 budget to the economic development and has backed a variety of new schemes to help encourage start-ups and SMEs during the past few months.
In January, Sharjah announced its third economic free zone with a royal decree ordering the establishment of Sharjah Media City. About 13,500 companies are already registered in the emirate’s two existing free zones Hamriyah Free Zone and Sharjah Airport Free Zone (SAIF Zone).
Source: S&P, Sharjah government