Dubai: S&P Global Ratings has affirmed its ‘A/A-1’ rating for Ras Al Khaimah (RAK), adding that the emirate’s outlook remains stable.

In a statement released late on Friday, S&P said RAK’s economic structure is relatively diverse when compared with that of other countries in the Gulf Cooperation Council (GCC).

The manufacturing sector contributes about 25 per cent of gross domestic product (GDP), real estate and business services 9 per cent, while wholesale and retail trade contribute 12 per cent.

The oil and gas sector represents only 4.8 per cent of GDP.

Tourism, a rapidly growing sector, is regarded as one of RAK’s economic priorities and its direct contribution is approaching 3 per cent of GDP. However, four products — stone, mica, glass, and ceramics — contribute nearly 85 per cent of exports and are largely used in regional construction.

S&P noted that weaker regional demand, due to lower hydrocarbon prices since 2014, has dented demand and investments. RAK relies on demand generated in the GCC region.

“We expect real GDP growth in RAK will increase to about 3 per cent in the coming years, thanks to the increase in business activity ahead of Expo 2020 in Dubai and capital spending in the GCC region. Leading indicators suggest

that growth momentum is set to continue in the main economic sectors, such as manufacturing, construction, services, and tourism. However, RAK’s economic prospects over the next two years will likely face headwinds stemming from the

strong dirham’s peg to the US dollar and tight monetary policy.”

The agency said that RAK’s fiscal risks were generally limited due to the government’s minimal spending responsibilities, its strong balance sheet, and its ongoing indirect financial support from the UAE federal government.