CGI Gulf Insights of the Week Jun 19 2020

  • ByCGI Gulf Insights of the Week
  • Sunday, 19 July 2020
  • Published inJuly 2020
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Country Risk Update - Bahrain

Risk Indicator  - DB5d
Risk Level        - High

Ratings Trend  Deteriorating 

Dun & Bradstreet downgrades Bahrain’s country risk rating on the back of the coronavirus and oil crises, which came just as progress was being made on fiscal reforms. Saudi Arabia's strong support for Bahrain provides a backstop to the economy. A giant oil and gas find off the west coast offers the promise of vast wealth if it proves commercially viable to extract.
Market Overview
Sustainable investing gains momentum in wake of Covid-19
A vast majority of regional investors have become interested in sustainable investing in the wake of the Covid-19 pandemic, according to new statistics from Swiss investment bank UBS. According to a new global survey from UBS, 75 percent of wealthy investors worldwide have concluded that life will never return to the way it was before the pandemic. In the UAE, however, 81 percent of respondents said they believe “a sense of fear will prevail for a long time.” Ali Janoudi, UBS Global Wealth Management’s head for the Middle East and Africa, said that the despite the concern about the future, positive trends may emerge from the pandemic.
Bahrain to add $470m into the budget to address Covid-19 economic impact
Bahrain is set to inject $470 million (BD177m) into this year’s state budget to cope with the expenses of tackling the coronavirus pandemic. The emergency funding was announced by King Hamad bin Isa Al Khalifa through the state-run Bahrain News Agency (BNA). According to a previous report from BNA, Bahrain’s gross domestic product growth rates were down by 1.1 percent in the first quarter compared to the same period in 2019. In April the kingdom announced drastic spending cuts in an effort to stretch the budget amid the double whammy of the Covid-19 crisis and the crash in oil prices, slashing operating expenses for ministries and government departments by 30 percent.
IMF lowers Middle East economic forecast over the 'twin shock'
The IMF Monday again sharply lowered its the Middle East and North Africa economic forecast, to its lowest level in 50 years, over the "twin shock" of the coronavirus pandemic and low oil prices. The region's economy will contract by 5.7 percent this year, and shrink by as much as 13 percent in countries torn by conflict, the Washington-based International Monetary Fund warned. The economic malaise will see poverty and unemployment rise, stoking social unrest, and send budget deficits and public debt surging, it said. In its regional economic outlook update, the IMF projected the economies of the Middle East and North Africa to contract by 5.7 percent this year, 2.4 percentage points lower than its April forecast.
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