The agency says that the economic fundamentals in the UAE remain sound but that country-specific factors, rather than the global credit crunch, will result in slow growth.

Speculative currency investment and increasing pessimism towards the real estate sector will have an impact, according to S&P. It says these factors are “tangentially related to the global credit crunch”, rather than being directly caused by it.

The agency adds that a slowdown in growth could be beneficial to the UAE, helping to reduce supply bottlenecks that have increased inflation.