Credit growth in the GCC is expected to improve by the end of the year as brightening economic prospects across the region spur a pick-up in lending, a report says.
"Credit remains relatively tight in the Gulf, where the property market correction and troubled regional conglomerates are hampering the banking sector's recovery," the report by the US economic consultancy IHS Global Insight said.
"The region's brighter economic outlook should eventually prompt greater lending by banks, with credit growth picking up by the end of the year."
But analysts say credit expansion is likely to be slower in the UAE as Dubai World's debt restructuring clouds the economic outlook for the private sector.
Easy access to credit helped to fuel a price bubble in property and other assets in the years leading to the financial crisis, with credit growth reaching levels of 30 per cent.
Banks gradually tightened their credit lines after losing money when the downturn led to a steep drop in property prices.
Exposure to Dubai World and the two Saudi conglomerates, the Saad Group and Ahmad Hamad Al Gosaibi and Brothers, added to lenders' nervousness.
Now governments in the region are seeking ways to encourage a resumption in lending after almost no loan growth last year.
Spurring loans activity is seen as vital as governments look to off-load some of the burden of supporting the economic recovery from the public to the private sector.
But the wait for a completion of Dubai World's debt restructuring is likely to act as an impediment to any improvement in credit growth in the UAE, analysts say.
Despite the group saying in May it had reached a deal in principle to restructure US$23.5 billion (Dh86.31bn) with core bank creditors, a final completion of the arrangement has yet to be announced.
"We would not expect a pick-up [in credit growth] in the fourth quarter as Dubai World is still a question mark," said Janany Vamadeva, a banking analyst at Al Futtaim HC Securities in Dubai.
"We do not expect an improvement until the first quarter of next year, especially in Dubai."
With provisioning for non-performing loans already made by many banks elsewhere in the region, they could now begin to plan ahead for future growth, said Ms Vamadeva.
As a result, annual credit growth of about 5 per cent was anticipated in Kuwait and between 5 and 6 per cent in Qatar, compared with only 1 to 2 per cent in the UAE, she said.
Bolstering the lending outlook in Kuwait is a 31bn dinar (Dh394.66bn), four-year plan designed to stimulate private investment through reforms and incentives aimed at the private sector. Improving access to capital for small businesses is a central pillar of the plan.
While Saudi Arabia has embarked on one of the largest infrastructure expenditure programmes per capita in the world, much of the investment may come from the government, rather than private-sector lending.
Analysts have argued the government risks crowding out banks by extending interest-free loans to ensure transport and power projects remain on course.
"Slow credit growth and delays in implementing infrastructure projects compound the regional risks for economic growth," said Alessandro Magnoli Bocchi, the chief economist at Kuwait China Investment Company.
@Email:tarnold@thenational.ae
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Spec%20sheet
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The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E77kWh%202%20motors%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E178bhp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E410Nm%0D%3Cbr%3E%3Cstrong%3ERange%3A%20%3C%2Fstrong%3E402km%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EDh%2C150%2C000%20(estimate)%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ETBC%3C%2Fp%3E%0A
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
How to get there
Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
The specs
Engine: four-litre V6 and 3.5-litre V6 twin-turbo
Transmission: six-speed and 10-speed
Power: 271 and 409 horsepower
Torque: 385 and 650Nm
Price: from Dh229,900 to Dh355,000
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
The specs
Price, base / as tested Dh1,100,000 (est)
Engine 5.2-litre V10
Gearbox seven-speed dual clutch
Power 630bhp @ 8,000rpm
Torque 600Nm @ 6,500rpm
Fuel economy, combined 15.7L / 100km (est)
The specs
Engine: 2.3-litre, turbo four-cylinder
Transmission: 10-speed auto
Power: 300hp
Torque: 420Nm
Price: Dh189,900
On sale: now
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013