Fitch Ratings says it has a negative outlook for the GCC in 2018 on geopolitical risk
Rating agency says some crude exporters struggling to adjust to new oil price reality
December 15, 2017
Fitch Ratings said it had a negative outlook for the Gulf Co-operation Council in 2018 amid heightened geopolitical risks and the inability of some oil exporters to adjust the new oil price reality.
"Budget deficits will persist across the GCC and will stay in double digits in Bahrain and Oman, despite the price recovery," Fitch said.
"For the majority of sovereigns, fiscal break-even oil prices are still considerably above current or expected actual oil prices. This is resulting in worsening sovereign debt and external asset ratios."
The rating agency said that it expects that GCC countries will sell US$110 billion of debt in local and foreign markets in and will draw down about $50bn from wealth funds and external reserves in 2018.
Three of 13 Middle East and North Africa sovereigns are on a negative outlook at Fitch and none are on a positive one.
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Read More:
Arabian Gulf states to tap debt markets, drawdown funds to the tune of $160bn in 2018, Fitch says
Bahrain forecasts 3.1% growth for 2017, yet debt challenges remain
Low oil price has taught GCC states fiscal prudence
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The rating agency said that the GCC had lost some of its reputation for stability in a conflict riven-region. Fitch said it didn't expect a quick resolution to the dispute some Gulf nations have with Qatar.
While Fitch said it expected growth of 4 per cent to 5 per cent in Egypt and Ras Al Khaimah and 3 per cent in Morocco, it forecasts growth elsewhere to be closer to 2 per cent.
Separately, Sami Al Qamzi, director general of Dubai Economy, was cited in the official news agency WAM as saying that he expected the emirate's economy to grow 3.2 per cent this year, 3.5 per cent in 2018 and 3.7 per cent in 2019.
Updated: December 15, 2017 01:31 PM
