Economic recovery from the coronavirus crisis in the oil-filled Gulf region will be slow, with pressure on the region’s banking sector, S&P Global Ratings said.
The Gulf countries fell into a sharp recession last year as the Covid-19 pandemic hit non-essential oil sectors such as hospitality, trade, and real estate, while lower oil prices hurt incomes. into the state.
Events like this year’s Dubai Expo and next year’s World Cup in Qatar, as well as a rebounding oil market, will provide some support but growth will remain below historic levels, S&P said.
“In fact, most countries will not return to the designated GDP of 2019 by 2023, with an even longer road for Saudi Arabia,” he said in a report on Sunday.
Recovery in sectors such as aviation, tourism and real estate will take time, and while vaccination programs are underway, there are downside risks associated with mutations in the coronavirus novel.
The weight of these factors measures the quality of the bank’s assets with the expectation that non-performing loans, as well as profit, will increase, with some banks expecting to post losses in 2021.
“We believe that the measures put in place by most central banks in the sector are supportive of liquidity but do not (or still do) remove or reduce credit risk from the banks’ balance sheet,” he said. S&P.
“The cost of risk will remain high after a 60% jump in 2020 as banks put aside provisions in preparation for increased pressure.”
This story was published from a wire group group with no text changes.