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This is how GCC economies will perform in 2021

GCC economies will fare better in 2021/22 than in 2020, some better than others, according to S&P Global Ratings

S&P Global Ratings expects a gradual economic recovery for Abu Dhabi from 2021 Expo 2020 should provide a platform for a recovery in economic activity GCC banks' asset-quality indicators will continue to deteriorate and the cost of risk to remain high

S&P Global Ratings projects median general government debt for all 135 sovereigns it rates will rise by end-2021 to 62.6% of GDP, from 49% at end-2019.

By 2023, two-thirds of rated sovereigns will manage to at least stabilize government debt to GDP, according to the rating agency’s forecasts.

Closer to home, GCC economies will fare better in 2021/22 than in 2020, some better than others, according to S&P Global Ratings.

Saudi Arabia

The sharp decline in Saudi Arabia’s net exports, due to OPEC Plus-related oil production cuts, brought down real GDP in 2020. S&P saw broad declines across non-oil sectors and steep drops in wholesale and retail trade and restaurants and hotels. 

The government’s fiscal consolidation measures included a July increase in VAT to 15% from 5%, which reduced domestic consumption in the second half of the year. 

In 2022, S&P Global Raetings expect economic activity to accelerate to close to 3% due to the end of OPEC Plus quotas. 


The UAE economy is dominated by the economies of Abu Dhabi (59% of 2019 UAE GDP) and Dubai (28%). 

Abu Dhabi is highly dependent on the hydrocarbon sector. Because of OPEC Plus cuts, S&P Global Ratings said Abu Dhabi’s oil production declined to an average of 2.8 million barrels a day in 2020, from 3.1 million in 2019. 

Non-oil sector activity stalled because of weak regional demand, tight fiscal and monetary policy, and rising geopolitical tensions. 

S&P Global Ratings expects a gradual economic recovery for Abu Dhabi from 2021, but with real GDP only to recover to close to 2019 levels by 2023.  

Dubai’s economy contracted sharply in 2020, owing partly to the importance of travel and tourism, two of the industries most affected by COVID-19. 

S&P Global Ratings expects broad declines across practically all other sectors, but the delayed Expo 2020, which will now take place Oct. 1, 2021-March 31, 2022, should provide a platform for a recovery in economic activity. 

S&P Global Ratings projects real GDP to recover to 2019 levels by 2023. 


S&P Global Ratings calculates a 5% contraction in 2020 or Bahrain’s real GDP, largely due to weakness in the financial services and manufacturing sectors, the two largest nonhydrocarbon sectors, and sharp contractions in the transport sector and hotels & restaurants. 

S&P Global Ratings expects the government’s plans to promote infrastructure development, including several large projects like the refinery modernization program, to support growth. 

Funding will come from the private sector ($15 billion), government-owned companies ($10 bn), and GCC funds for infrastructure investment ($7.5 bn), it said.

S&P Global Ratings said GDP in U.S. dollar terms is likely to recover to 2019 levels midway through 2022. 

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Kuwait’s economy is the most directly dependent on hydrocarbons of all GCC sovereigns, said S&P Global Ratings. 

As an OPEC member, Kuwait has committed to implement oil production cuts until April 2022. 

S&P Global Ratings expects economic growth to surge in 2022 due to stronger net exports, driven by rising oil production. It expects the non-oil sector to play only a limited role in Kuwait’s recovery over the next few years.


The OPEC Plus agreement to limit oil production, which Oman voluntarily signed, helped reduce the country’s volumes by at least 6% in 2020. 

Lower economic activity due to pandemic-driven lockdowns and curfews, the slowdown in global tourism, and planned delays in public-sector capital spending weighed on the non-oil sector in 2020. 

S&P Global Ratings expects a gradual recovery in domestic demand and investment for 2021. Economic activity will find support from rising gas production from the Ghazeerfield. The lifting of OPEC production limits in 2022 will support net exports. 

S&P Global Ratings projects real GDP growth of 2.2% in 2021 and 3.5% in 2022 and real GDP to recover to 2019 levels by 2022.


Qatar is second only to Kuwait in the GCC that is in direct economic dependence on the hydrocarbon sector.  

Qatar’s hydrocarbon sector is about 80% gas and 20% oil, however, it is the non-hydrocarbon sector that dragged down economic activity in 2020 and that S&P Global Ratings expects to support the recovery in 2021. 

From end-2025 through 2027, following extensive investment in Qatar’s North Field, S&P Global Ratings expects liquefied natural gas production to rise sharply by about 64% to 126 million tons annually (about 3.1 million barrels per day of oil equivalent).

GCC Banks

S&P Global Ratings expects GDP growth in the Gulf Cooperation Council (GCC) countries to slowly recover from last year’s sharp recession triggered by the COVID-19 pandemic and low oil prices. 

However, It sees long-lasting adverse effects from the 2020 shock on GCC economies and banking sectors. Saudi and Qatar’s banking sectors will be less impacted than those in the UAE, Oman, and Bahrain, S&P Global Ratings said.

Lending growthIt expects banks’ asset-quality indicators will continue to deteriorate and the cost of risk to remain high as they start recognizing the true impact of 2020 and forbearance measures are lifted in second-half 2021. 

Given continued low-interest rates, banks’ profitability will remain low in 2021 and beyond, with some potentially showing losses in 2021.

S&P Global Ratings added that strong and stable capital buffers, good funding profiles, and expected government support should continue to support banks’ creditworthiness in 2021.