Oil price reform, tourism and trade revival to boost GCC economic prospects

Oil price reform, tourism and trade revival to boost GCC economic prospects

Oil prices reform and a resurgence in tourism and global trade will improve the countries’ economic prospects and are expected to narrow the Gulf Cooperation Council (GCC) countries’ fiscal deficit/GDP ratio, Fitch Ratings said in a report. Fitch’s forecasts assumed average Brent oil prices of $63 per barrel in 2021 and further removals in OPEC+ production cuts. The ratings agency firm also added that reform momentum and improved political stability would further enhance prospects. The report added that hydrocarbon revenues constitute more than 60 percent of budget revenue on average for the region. This “shows the region’s vulnerability to renewed oil price volatility in the near term and underscores the scale of the medium-term public finance reform challenge across the region.” Currently, Fitch assigns four countries in the MENA region a “negative” outlook. These are: Jordan, Kuwait, Oman and Tunisia. This is due to the “lingering hit to public and external finances” these economies have suffered from as a result of the pandemic. Liquidity and funding uncertainties remain risks for Kuwait and Tunisia, it said.