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GCC growth to remain robust: EmiratesNBD

October 2015

October 19, 2015 | 12:00 Dubai

Notwithstanding lower budget revenues and widening deficits, real growth in the GCC appears to remain robust, underpinned by increased oil production as governments boost output to mitigate some of the impact of lower oil prices, according to the latest MENA quarterly report by Emirates NBD Global Markets & Treasury, shared with Wealth Monitor.

Economic developments in the GCC continue to be driven largely by the sustained decline in oil prices over the last year, and the impact this is having on the region’s budgets and banking sector liquidity, the report notes, adding that the two issues are not independent, as government deposits – generated from oil revenue – are a key contributor to total bank deposits in the GCC countries.

“With oil prices forecast to recover only moderately and government spending likely to remain high in the coming months, we expect interbank rates to continue rising in Q4 2015,” it notes.

Talking about the UAE, where the deposit and lending growth has slowed sharply over the last quarter, the report adds that some commercial banks are paying more for deposits as loan/ deposits ratios rise. The loan/ deposit ratio for all banks rose to 102.3 in August, the highest reading since September 2012.

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