By Andy Sambidge
Rating agency says region is expected to remain insulated from global economic slowdown
Standard & Poor's has said that it believes Gulf economies will remain insulated from economic and political turbulence in the broader MENA region, and globally.
The rating agency - which rates Abu Dhabi, Bahrain, Kuwait, Oman, Qatar, Ras Al Khaimah, and Saudi Arabia - said in a new report that the outlook was stable for all of them.
However, S&P added that despite the GCC's relative wealth, and its forecast for 4.6 percent GDP growth in 2013, structural challenges "continue to constrain sovereign ratings".
"There are still particular shortcomings in the effectiveness and predictability of policymaking in the GCC," S&P's credit analyst Dima Jardaneh said.
"Weaknesses include the quality of policy debate; the strength and depth of institutions; transparency of decision-making; data monitoring and reliability of information; legal frameworks and the rule of law; and succession risks."
The report also covered the possibility that oil reserves could peter out in some GCC countries much earlier than in others.
"The oil endowment varies significantly across the GCC," said Jardaneh.
"Reserves at the current production levels will last about 90 years in Abu Dhabi and Kuwait, and 70 years in Saudi Arabia, but are considerably lower in Oman and Bahrain where, at current production levels, supplies could run out in the next two decades."
Last year, S&P said Gulf banks were likely to continue their steady recovery from the 2008 crisis and remain isolated from eurozone turmoil for the rest of 2012 and 2013.
The rating agency said that despite slower balance sheet growth, most GCC banks have maintained healthy earnings generation before provisioning.