Muslim pilgrims wear masks at the Grand Mosque in Saudi Arabia’s holy town of Mecca on February 28, 2020. Saudi Arabia suspended visas for visits to Islam’s holiest web-sites for the “umrah” pilgrimage, an unparalleled transfer induced by coronavirus fears that raises thoughts above the once-a-year hajj.

ABDEL GHANI BASHIR | AFP | Getty Illustrations or photos

Oil rates, tourism and capital marketplaces strike by the coronavirus can have an impression on Gulf economies, an analyst informed CNBC this week.

“For the GCC economies, we have discovered 3 channels of transmission of the COVID-19,” Mohamed Damak of S&P World Scores stated, referring to the novel coronavirus that was initially detected in China past yr. He spoke to CNBC’s “Money Relationship” on Thursday.

The Environment Health and fitness Business on Wednesday declared the virus a world-wide pandemic after it unfold to extra than 110 countries and infected at minimum 121,000 people today.

Iran, the worst strike Middle Eastern nation, reportedly has all-around 9,000 verified scenarios and more than 350 deaths, according to the Connected Press. Countries this kind of as Saudi Arabia, Bahrain, the UAE and Oman also have a number of conditions of infection.

Below are three strategies Gulf economies can be impacted by the virus:

Oil rates

Oil is one of the “principal” export products and solutions of Gulf Cooperation Council nations around the world, and costs have fallen significantly this 7 days after OPEC and its allies unsuccessful to achieve an agreement to lower output.

Crude futures plunged additional than 20% Monday right after Saudi Arabia claimed it would raise manufacturing and give discounts on its oil. On Thursday afternoon in Asia, Brent crude was down 6.01% at $33.64 a barrel, even though U.S. crude traded at $31.15 a barrel, down 5.55%.

That is very likely to be problematic for countries in the region, numerous of which depend seriously on oil revenues.

Damak added that S&P Global Scores revised its selling price forecast from $60 a barrel to $40 a barrel for the calendar year. That determine is down below the fiscal breakeven oil prices for all Middle East and North Africa oil producers, according to IMF info.

“And if you seem at the geographic distribution of exports, you can see for illustration that for Oman, additional than 53% of exports go to nations around the world where we see instances of COVID-19 both superior or spiking,” he stated.

Vacation and actual estate

Investing by foreigners is also very likely to just take a strike mainly because of the coronavirus, especially in Saudi Arabia and the UAE.

The UAE draws in additional than 17 million readers each and every year, Damak explained, and this 12 months it hopes to bring in 25 million tourists to Expo 2020 Dubai in October.

Saudi Arabia gets 20 million vacationers yearly, most of them for religious functions. The kingdom has temporarily suspended entry to the region for the purpose of Umrah and viewing the Prophet’s Mosque, an important internet site for Muslims.

Damak explained, at this stage, it’s complicated to tell if Expo 2020 and the pilgrimage season — which starts in July — will be afflicted by the virus outbreak.

“If that have been to be the scenario, then of course the economic effects on both Saudi Arabia and the UAE would be higher than what we currently hope,” he reported.

On the real estate facet, he pointed out that Chinese purchasers by yourself contributed to 1% of serious estate transactions in Dubai in 2018. But getting decisions may be put off thanks to the “psychological outcome” of the coronavirus in spite of slipping desire fees, he explained.

Capital markets

There has been “extraordinary volatility” in funds markets not too long ago, and that may well necessarily mean corporations with “weak credit stories” will have problems coming to the marketplace, claimed Damak.

“This suggests that Bahrain, Oman and it’s possible also some corporates in the UAE will in all probability come across it a little bit additional complicated to get to the market place this calendar year.”



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