The Double-digit deficits as well as credit downgrades due to the current COVID-19 Pandemic related issue, for native nations that are not doing diversification of their economies. The gulf nations, like the remaining global scenario, have been put in the policies for curbing the effects of the deadliest Coronavirus.
Most of the Gulf nations, unlike most of their global emerging market contemporaries having a kind of fiscal cushion for aiding in their economies via the business-friendly policies for luring in the attention of most global investors. However, even the huge surplus reserves weren’t enough to resist off the slump-down within the COVID-19 and the International Monetary Fund (IMF) has a prediction that the Gulf Nations’ in tandem stated that their economic output will slump down 7.1 percent within this year.
Bolstered by a 3 percent rise in the non-oil private sector expansion, the IMF expects that the GCC as a whole will be rebounding by 2.1 percent within 2021. The Non-Oil private expansion is exactly what the GCC requires and in fact native economies must be prompting for diversification of their interests away from their core dependency viz Oil, in case they wish to achieve a balanced economic expansion.
However, in case, they opt out or fail to diversify, it can in turn lead to severe consequences. It can already be witnessed from the prevailing situation within Oman, who have joined in very late to the diversification strategy, making it tougher for them as the overall exposure to Oil rates is no longer acceptable. This in turn has been depicted clearly within the nation’s huge budget deficit of 17 percent as well as the credit downgrades it has to suffer-two downgrades from Moody’s Investors Service, one from Fitch Ratings and one from S&P Global Ratings.
There is nothing that is quicker as well as can be fixed easily for the nations with huge deficits. The Global markets will still remain volatile until the pandemic can be further contained or till the vaccine can be developed. The better news as of date is that for all nations interest rates will keep up a lower profile for a longer time period. There is also no doubt that there will be huge opportunity for several nations as well as firms to re-invent their products as well as services and at the same time creation of better sustainable as well as agile framework for tolerating the external blows.
The positive news for many GCC nations is that before the catastrophe had stroke which was not a new thing for them, majority of them had already got the blueprints regarding economic diversification, investments within tourism, Science, Agri-foods, Financial Services, as well as technology. There is inevitably huge interest for procuring goods as well as services-in few ways it could be stated that COVID-19 to have speed up a revival in patriotism that already was a feature of global economy dictated by Trump’s trade war, tariffs as well as ‘America first’ policies.
The roadblocks like Native supply chains, healthcare, online education, digitalized services, FinTech, Renewable energy as well as online commerce, which were core sectors gaining momentum even before the catastrophe of Pandemic stuck, will at present witness better interest going forward. Therefore, it has hugely became a vital part for GCC nations for transitioning their entire focus for creation of better sustainable environment within these sectors.
Aiding the native SMEs as well as producers is in modern times is a matter of financial urgency if not patriotism. Now is the period in imitation of creating a domestic infrastructure as well as capacity of numerous sectors like that of Food, Agriculture, Pharmaceuticals, Education, Clinical equipment, Hardware, E-Commerce and manufacturing and as well as native entrepreneurs be able to be at well at home – as well as native worth chains perform enriched by means of native innovation.
Enriching worth chains also depicts growing non-oil power solutions those which are commercially viable. In Oman, for instance, which is hugely oil dependent, they are, arguably belated, strikes closer to fair sources of energy. Solar as well as wind flora are meanwhile within operation between components of the nation and the national power agency OQ is investing among other choices like ‘green molecules’ – hydrogen yet biofuels.
In July, the Emirates Water as well as the Electricity Co. awarded a consortium featuring France’s EDF Renewables yet China’s JinkoPower a 2GW control task – the national largest Solar project. Meanwhile, Sharjah is put one’s cards on the table to flip a 47-hectare landfill within a solar strength assignment producing 42MW.
In Saudi Arabia, US-based Air Products as well as its Saudi partners agreed according to make investments $5bn according to build an inexperienced hydrogen-based ammonia production facility powered through renewable energy. A after shaped on non-oil energies yet non-energy industries do solely in reality raise salvo nations bear an enabling infrastructure, who is why such is honest to consult GCC states continue undivided of theirs pressure in conformity with creation.
In the UAE, the governance is eyeing renewable energy then the green economy as much the couple foremost riding forces up to expectation choice administration the country’s sustainable, green recovery. By 2050, the nation pursuits to supply 50 percent of its power from Solar and Nuclear Power.
Oman’s instant five-year plan, which intention begin next year, so well as like Saudi Arabia’s Vision 2030, UAE’s Vision 2030, and Kuwait’s Vision 2035 programmes are all variants of a object about diversification and building capacities.
After a pause, the GCC economies are revving upon in imitation of resume the diversification up to expectation intention tempt traders in conformity with absorb advantage of opportunities as it arises – because diversification is the solely earth in imitation of sustainable increase between the GCC – and every singular government within the place is aware of it.
Earlier it year, Etihad Rail awarded joining contracts as much quantity about a Dhs4.4bn 605-kilometre row out of Ghuweifat to the Port regarding Fujairah regarding the eastern coast. In July, the emirate launched the Dubai Metro Red Line expansion called Route 2020, spanning 15 km including seven stations. The Dhs11bn mission pleasure encompass seven stations and as well as glorify 125,000 passengers daily.