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Investing.com -- The United Arab Emirates (UAE) has seen a significant boost in credit growth, leading to a substantial increase in property prices, especially in Dubai.
This surge in prices has created a risk of market correction, a situation that has previously caused concerns over banking and debt in the UAE. Despite this, there is evidence to suggest that banks and government-related entities are well-equipped to handle any potential downturn in the property sector.
Since the pandemic, the demand for credit in the UAE has bounced back robustly. Private sector credit growth has averaged close to 6% year-on-year from the start of 2022.
Over the past eighteen months, this growth rate has quickened to approximately 10% year-on-year, marking its fastest pace in more than a decade. This growth rate surpasses credit growth in the rest of the Gulf states.
The primary factors contributing to this increase have been personal loans for consumption and loans to financial institutions. Both of these sectors have seen a drastic rise in their share of outstanding credit.
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