Improving oil prices and ongoing commitment to public spending will underpin the outlook for companies in the region
Non-financial firms in the Gulf will be supported by higher oil prices and public spending in 2018, according to Moody’s latest investors report.
"Improving oil prices, which are narrowing fiscal deficits, as well as an ongoing commitment to public spending and a supportive stance towards government-related issuers will underpin the stable outlook on GCC companies over the next 12 months," the report quoted Rehan Akbar, vice president and senior analyst at Moody's to say.
Oil prices above $50 per barrel will afford Gulf countries larger fiscal buffers and slow the rate of progress on fiscal reforms, but support their domestic operating environment, according to the report.
However, with fewer growth opportunities, GCC companies will move toward consolidations and acquisitions outside the region, as well as investments in increasing vertical integration, and a larger corporate focus on costs.
In the wider Middle East, Turkey looks set to fare negatively over the course of the year given limited clarity in terms of policy direction and reforms, he added.
"Limited clarity on policy direction and on the pace of implementation of structural economic reforms, as well as political risks and high currency volatility drive the negative 2018 outlook for Turkish companies," said Akbar.