Growth of 2.5% is expected for Gulf economies through 2023

The Standard & Poor’s rating agency said it is likely that the economic cycle in the Gulf states will take “at least several quarters to fully recover” from the double shock of the coronavirus pandemic and the drop in prices of the oil.

The report, released by the agency’s credit analyst Toshin Engen, predicted that the Gulf economies would achieve moderate GDP growth this year, averaging 2 percent, after big shocks in 2020 in light of the Covid-19 pandemic and low oil prices. .

She said pressures will continue in the corporate sectors, particularly companies operating in tourism, aviation, real estate and non-food retail sectors, while the retail sector of food products will be among the strong sectors.

She expected most companies to maintain conservative strategies, with the primary focus on controlling spending, proactive liquidity management and maintaining cash flow, while new investment would remain limited in the market. most sectors.

2021 warning

The report states that the average GDP growth of the Gulf economies combined is 2.5% between 2021 and 2023.

The report expects the average price of a barrel of Brent to reach $ 50 in 2021 and 2022 and $ 55 in 2023 and beyond. With the continued distribution of the vaccine in many countries, the agency “S&P Global Credit Ratings” estimates that there remains great uncertainty about the evolution of the Covid-19 pandemic and its economic repercussions.

Large-scale immunization operations, which some countries may undertake by mid-year, will help pave the way for social life and economic activity to return to normal levels.

Gradual recovery

“As we forecast a gradual recovery in economic growth, we believe that most of the region’s sovereign government economies will remain below 2019 levels through 2022. Therefore, businesses are expected to Gulf countries continue to come under significant pressure. “

The report indicates that the full recovery of the global aviation and tourism sectors will take several seasons and that these two sectors therefore remain the most exposed. Although there is great uncertainty about the future of international air transport.

Standard & Poor’s predicted a slight recovery in 2021, as traffic and revenue will remain lower at rates between 40% and 60% in 2019, and lower rates between 20% and 30% in 2022.