UAE, 10 January, 2025 : S&P Global Ratings forecasts steady economic growth in the UAE, with real GDP growth remaining strong from 2025 to 2027. This growth will be driven by a buoyant non-hydrocarbon sector, supported by business-friendly regulations, a low corporate tax regime, and a simplified visa system. Despite potential geopolitical risks and fluctuations in oil prices, S&P expects economic risks to remain manageable due to the UAE's demonstrated resilience in past periods of instability.
The report also highlights the positive outlook for UAE banks, which have benefitted from the strong domestic economy, leading to improved asset quality and lower credit losses. S&P predicts that the banking sector’s earnings will dip slightly in 2025, after strong performance in the past two years. The lending book is expected to continue expanding, driven by monetary policy easing and a supportive economic environment.
UAE banks’ non-performing loans and credit losses are anticipated to remain low, as the solid performance of the non-oil sectors continues to improve asset quality. The report notes that high profitability over the past two years has allowed banks to set aside provisions for legacy loans, leading to a reduction in stage 3 loans.
S&P also expects that the profitability of UAE banks will remain high, although slightly lower than the peak of 2023, with continued government support and stable capital buffers contributing to their resilience.
Source : www.zawya.com
