Countries across the Gulf are being hit by the dual shocks of an oil price crash and the ongoing global health crisis that has severely disrupted economic activity. In the majority of cases, oil revenues are the economic lifelines upon which governments have relied to fund bloated public sector wage bills and diversification programs simultaneously.
Covid-19 has severely hampered activity in key sectors, such as aviation, real estate, trade, construction and tourism. These are already significant industries in UAE and Qatar and were set to form an integral part of Saudi Arabia‘s Vision 2030 diversification programme. Consequently, even the wealthiest Gulf states face a weakening long-term economic outlook.
Change in the region’s labour markets is likely to accelerate in the immediate aftermath of Covid-19. In order to protect local populations and prevent rises in unemployment, governments are already imposing measures to expel expatriate workers from public and private sector jobs, including increasing costs for employers. Rapid policy developments could lead to skills gaps and labour market issues.
Countries with substantial financial cushioning such as Kuwait, Saudi Arabia and Qatar will initially be able to mitigate the more immediate effects of the pandemic. Their full extent, however, will likely be felt in the medium- to long-term with a notable impact on diversification efforts and broader economic stability.
Domestic unrest and protests pose less of a concern in Gulf states. Nevertheless, consistently low oil prices will increasingly expose ruling elites who have built their power on oil and sectors dependent on oil wealth, leading to declining levels of public trust. Oman is currently at greatest risk of this in the coming months.
This report analyses the growing prospect of substantial policy risk across the Gulf. It focuses on the economic fallout of both the global pandemic and low oil prices, and their impact on the wider business environment.
If you would like to receive the full report please contact us via the link below.
Key Takeaways Japanese corporates are facing growing pressure from investors, the government, and the broader public to raise ESG (environmental, social, and governance) standards in
SIBYLLINE SITUATION UPDATE BRIEF: UK – RUSSIA. DEMOCRATIC AND FINANCIAL STRUCTURES REMAIN VULNERABLE TO INTERFERENCE
Key Takeaways The UK Parliament’s Intelligence and Security Committee published its report on Russian interference in British democratic processes on 21 July, concluding that the
Key Takeaways Mali will witness sustained protests and political instability in the weeks ahead, as opposition groups push for the creation of a new transitional
ALERT: HONG KONG – TIKTOK’S WITHDRAWAL HIGHLIGHTS FEARS OVER DATA PRIVACY AND CENSORSHIP UNDER NEW SECURITY LAW
EVENT TikTok, a popular video-sharing platform with over 150,000 users in Hong Kong, announced on 7 July that it will withdraw its app from the
ALERT: HONG KONG – ELEVATED RISK OF DISRUPTIVE UNREST, AS BEIJING ADOPTS SECURITY LAW ON THE EVE OF HANDOVER ANNIVERSARY
EVENT At 1800 hours (CST) on 30 June, China’s official news agency Xinhua released a statement confirming that President Xi Jinping has signed off on