Standard Chartered predicts slowdown this year as virus impacts oil demand, trade and tourism in Gulf region
Gulf economies will grow at a slower pace than estimated this year as the coronavirus hurts oil demand, trade and tourism, Standard Chartered has said.
“The Gulf Cooperation Council is exposed to the slowdown in global growth – and China growth in particular – via two main channels: softer oil demand growth (with lower prices underpinning the need for ongoing production cuts by OPEC producers) and weaker trade and tourism,” economists Bilal Khan and Carla Slim wrote in note dated February 25.
More than 80,000 people globally have been infected with the coronavirus which has spread from China. In recent days, the number of cases has risen across the oil-rich Middle East prompting many airlines to restrict flights.
The bank reduced expectations for Brent crude prices to an average $64 per barrel this year, down from an initial estimate of $70. The revision also takes OPEC’s December decision to deepen oil cuts into account, Khan said.
OPEC’s curbs will be shouldered by Saudi Arabia, the economists said, pushing growth to 1 percent this year from an earlier forecast of 2.3 percent. Oman sells large amounts of its oil to China.
“The United Arab Emirates’ - and in particular Dubai’s -position as a trade and transport hub makes the economy particularly vulnerable to the impact of coronavirus disruption to flights and global supply chains,” Khan and Slim wrote in Tuesday’s note.
They expect growth in the UAE at 1.1 percent down from 2.1 percent.