Slow UAE Credit Growth Set to Linger On

Slow credit growth driven by weak credit demand in UAE in 2017 is expected linger on this year, economists and analysts have said. UAE Central Bank data on credit growth released in December showed weak credit demand in 2017. Gross loans fell 0.9% month-on-month in December, resulting in an annual growth of just 1.7%, Arabian Business reported. “The monthly fall in total loans in December appears to be a seasonal effect, with similar trends seen in the previous three years. Lower government-related entities borrowing [-6.4%] month-on-month was largely behind the overall drop in December 2017, suggesting a notable repayment of debt,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. Overall data continues to highlight the weak credit demand environment in 2017, with loan growth decelerating from 6% at end 2016. “We see a number of factors driving this, including: i) a higher oil price supporting government revenue; ii) ongoing restructuring and still cautious spending plans by corporates [private and GRE-related]; and (iii) soft consumer sentiment with continuing labor market weakness,” said Malik.