S&P: GCC Growth Hindered by Double Whammy of COVID-19, Low Oil Prices

S&P: GCC Growth Hindered by Double Whammy of COVID-19, Low Oil Prices

Since mid-March, we have taken negative rating actions on 16 rated regional players, mostly amid increased pressure from the global pandemic and a sharp fall in hydrocarbon prices. (Shuttrstock)

S&P Global Ratings has seen an abrupt and severe global credit downturn caused by the Covid-19 pandemic, with corporates and infrastructure players in the GCC countries feeling the effects, according to a new report.

"Since mid-March, we have taken negative rating actions on 16 rated regional players, mostly amid increased pressure from the global pandemic and a sharp fall in hydrocarbon prices, and significantly lowered our economic growth forecasts for the GCC countries," said S&P Global Ratings credit analyst Timucin Engin.

"We now expect a mid-to-high single digit real GDP contraction for most rated GCC sovereigns in 2020 and operating conditions to remain weak over the next few quarters."

"As a result, most regional companies' earnings and revenue will be hit, and we have even slightly lowered topline forecasts for relatively more resilient sectors, such as telecom, due to an overall weaker macroeconomic picture and subdued population trends,“ Engin added.

"We expect Dubai real estate to remain under pressure in 2020 with only a partial potential recovery in 2021, which may be slow and painful given