S&P Global Ratings Forecasts 5.3% GDP Growth for UAE in 2024

Leading credit rating company S&P Global Ratings projects that the UAE's real GDP will expand by 5.3% this year compared to 3.4% in 2022.

The credit rating agency stated in a new study that banks in the United Arab Emirates had extraordinary profits for the entire year 2023.

The reason for this was greater interest margins and lower provisioning requirements, along with increased liquidity as deposit growth outpaced the growth of new loans.

Furthermore, the report underscores the stability of the UAE banking sector, with optimistic outlooks prevailing.

S&P Global Ratings anticipates that the UAE's economic expansion will be propelled by increased oil production and robust performance across non-oil sectors.

Key contributors to non-oil GDP growth are expected to include the thriving hospitality, real estate, and financial services domains.

In a reflection of the banking sector's resilience, several UAE banks achieved record profits in 2023 amidst a backdrop of robust credit expansion and favorable interest rate trends.

The conducive economic environment also translated to minimal provisioning requirements for new loan losses.

Highlighting the robust liquidity position of UAE banks, S&P Global Ratings underscores the strong reliance on core customer deposit bases, which expanded by approximately 12% in the past year.

This, coupled with limited dependence on external funding, fortifies the funding structures of UAE banks.

Emphasizing the strength of UAE banks' net foreign assets, the report notes a substantial increase, rising to 27.9% of system-wide domestic loans as of November 30, 2023, from 9.6% at the close of 2021.

Source: Trade Arabia