DUBAI: Inflationary pressures are likely to persist for one to three years, according to a survey from the CFA Institute.
A large majority (65 percent) of respondents to the survey from the global investment professionals body thought that monetary policy and supply-side constraints would combine to create pricing pressures.
But they were closely split on whether inflation would cause central banks to restrict monetary policy as a result (31 percent think central banks will switch to a restrictive policy, 34 percent think not).
“Across markets, we are clearly seeing signs of a multi speed recovery together with inflationary pressures, a potential for monetary stimulus addiction, tax hikes, emerging regulatory risks, and questions over the actual financial health of corporates,” said Olivier Fines, the CFA regional head of advocacy.”
Inflation was one of a number of investor concerns highlighted in the survey, which also included responses from the Gulf-based investment professionals.
It found that worries about corporate debtors not being able to pay their loans have increased among UAE investors.
The UAE led the list of countries where this concern was particularly high, at 89 percent, the report, which analyzed the impact of COVID-19 on financial markets, said.
“Emerging economies show more concern in general over credit default risk in the short term than advanced economies,” it said, listing South Africa, India, and Brazil along with the UAE.
But this concern was also observed globally, the report showed, with a majority of 56 percent saying credit default risk has increased in the short term.
Inflation a worry for global investors CFA survey finds
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Inflation a worry for global investors CFA survey finds
- The study found that worries about corporate debtors not being able to pay their loans have increased among UAE investors
Saudi banking sector outlook stable on higher non-oil growth: Moody’s
RIYADH: Saudi Arabia’s banking sector outlook remains stable as stronger non-oil economic growth and solid capital buffers support lending and profitability, Moody’s Ratings said, forecasting continued expansion despite liquidity constraints.
In its latest report, credit rating agency Moody’s said the Kingdom’s non-oil gross domestic product is projected to expand by 4.2 percent this year, up from 3.7 percent recorded in 2025.
In January, S&P Global echoed a similar view, saying banks operating in Saudi Arabia are expected to sustain strong lending growth in 2026, driven by financing demand tied to Vision 2030 projects.
Fitch Ratings also underscored the healthy state of Saudi Arabia’s banking system last month, stating that credit growth and high net interest margins are supporting bank profitability in the Kingdom.
Commenting on the latest report, Ashraf Madani, vice president and senior credit officer at Moody’s Ratings, said: “We expect credit demand to remain robust, but tight liquidity conditions will continue to limit the sector’s lending capacity.”
Madani added that operating conditions in Saudi Arabia will continue to support banks’ strong asset quality and profitability.
“The operating environment for banks remains buoyant, underpinned by a forecast increase in non-oil GDP growth, robust solvency and continued progress toward the government’s economic diversification goals,” he added.
Moody’s said authorities in the Kingdom are introducing business-friendly reforms to bolster investment and private sector activity, while implementing key development projects and preparing for major global events.
Saudi Arabia continues to advance reforms including full foreign ownership rights, simplified capital market registration procedures and improved investor protections, which could accelerate credit growth to 8 percent this year.
Problem loans are expected to remain near historical lows at around 1.3 percent of total loans, supported by ongoing credit growth, favorable operating conditions and lower interest rates, which collectively strengthen borrowers’ repayment capacity.
Retail credit risk remains controlled in Saudi Arabia because most borrowers are government employees with stable income streams.
“Concentration of single borrowers and specific sectors remains high although the growing proportion of consumer loans — now nearing 50 percent of overall sector lending — continues to reduce aggregate concentration risk,” added Moody’s.
The report said profitability is expected to remain solid among Saudi banks, supported by sustained loan growth and fee income.
Margins are expected to remain stable despite lower asset yields as banks take advantage of credit demand to widen loan spreads on existing and new lending.
Moody’s expects net income to tangible assets to remain stable at 1.8 percent to 1.9 percent this year.
The report added that Saudi banks benefit from a very high likelihood of government support in the event of any failures.
“We assume a very high likelihood of government support in the event of a bank failure. This is based on the government’s track record of timely intervention,” Moody’s said.
It added that Saudi Arabia remains the only G-20 country that has not adopted a banking resolution framework. However, it is the only Gulf Cooperation Council member to have introduced a law for systemically important financial institutions.
