Dubai, United Arab Emirates (CNN) – S&P Global Credit Ratings said in a new report released on Sunday that it expects long-term negative effects after the shock of the Corona pandemic in the Gulf Cooperation Council countries, represented by slow growth in GDP and banking sectors in the region.
Real GDP in the Gulf region contracted sharply in 2020 due to lower oil prices and a major recession linked to the pandemic in the hospitality, trade and real estate sectors.
In its report, “The Gulf Banking Sector: A Long Journey to Recovery,” S&P indicated that despite the advancement of vaccination programs in the Gulf region, the recovery of the aviation and hospitality sectors will take time with significant negative risks from other waves and mutations of the virus.
The agency expects the average oil price for 2021 and 2022 to be around $ 60.
The report also affirmed that the recovery of the hydrocarbon sector and the events that are scheduled to take place in the region, such as the Expo 2020 Dubai and the 2022 FIFA World Cup in Doha, will boost economic growth, but it will remain below historical levels.
Most Gulf countries are not expected to return to nominal GDP levels for 2019 before 2023, according to the report, which predicts that the road will be “longer” for Saudi Arabia.
As for the banking sectors, the report expects that the sectors in Saudi Arabia and Qatar will be less affected than those in the United Arab Emirates, the Sultanate of Oman and Bahrain, while in Kuwait they will depend on the development of the financial impasse.
Find out more about the impact of the different sectors in the GCC countries, in the above infographic:
