Gulf financial resilience to help ‘difficult’ recovery

Police car patrols Al-Ras district, famous for its gold and spice markets, after a full lockdown, following the outbreak of the coronavirus disease (COVID-19), in Dubai, United Arab Emirates, March 31, 2020. (Reuters)
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Updated 30 September 2020

Gulf financial resilience to help ‘difficult’ recovery

  • Abu Dhabi’s sovereign debt is classed AA by S&P

DUBAI: The Gulf region is expected to face a difficult recovery from the economic shock of the coronavirus disease (COVID-19) pandemic, but general financial resilience can be expected to mitigate the pain for its major economies.

That was the message from senior analysts at S&P Global, the influential ratings agency, at a webinar presentation in Dubai on Monday.

Trevor Cullinan, director of sovereign ratings, said a “self-starting recovery” from the economic downturn was unlikely, and prospects would largely depend on a recovery in the global economy and world trade, as well as the oil market.

“Structural changes in the oil price have had an effect on government revenues, leading to bigger government deficits and weaker government balance sheets,” Cullinan added.

Most government ratings have been downgraded in recent years as oil declined from historically high levels, but of sovereign ratings in the region only Bahrain and Oman had been classed as non-investment grade.

Cullinan said that he foresaw a “relatively muted improvement in fiscal balances and GDP growth” from the pandemic shock, with oil prices forecast at $50 a barrel for the next two years and only rising to $55 in 2023.

However, the outlook was tempered by the relatively strong position of the banking system in the region, with Saudi banks, in particular, enjoying “pretty decent” growth in the first half of 2020 which is expected to continue for the rest of the year, according to Ben Young, director of financial institutions at S&P.

He said that although there was downward pressure on the banking system, it could absorb another $36 billion of shock before suffering serious damage to its capital bases.


Saudi Arabia signs AI agreements with IBM, Alibaba and Huawei

Updated 51 min 38 sec ago

Saudi Arabia signs AI agreements with IBM, Alibaba and Huawei

  • Deal with Alibaba cloud will 'help Saudi Arabia’s journey to develop world-class smart cities'

RIYADH: The Saudi Data and Artificial Intelligence Authority (SDAIA) signed three agreements with IBM, Alibaba and Huawei on Thursday.

The memorandums of understanding came on the second day of the  Global AI Summit being held in the Kingdom.

The deal with Alibaba Cloud is designed to “empower Saudi cities with intelligence-driven smart city solutions,” Saudi Press Agency reported. 

The partnership will support Saudi Arabia’s journey to develop world-class smart cities.

SDAIA and Alibaba Cloud will work together to develop digital and AI solutions in safety and security, mobility, urban planning, energy, education, health, among others.

“Saudi Arabia’s Vision 2030 has clear goals to transform KSA cities into smart ones by unlocking the value of city data as a national asset to realize Vision 2030 aspirations,” SDAIA president Abdullah bin Sharaf Al-Ghandi, said.

“Our journey to creating smart cities that rank among the smartest in the world is already well underway with Riyadh City. 

This partnership with Alibaba Cloud will support the acceleration of the transformation of our cities, through enabling intelligence-driven technologies and AI techniques that will fuel sustainable economic development and a high quality of life to our citizens.”

Phillip Liu, General Manager of Middle East and Africa, Alibaba Cloud Intelligence, said: “We are proud to bring Alibaba Cloud’s proven cloud and AI products as well as our global experiences and to combine these with the expertise from SDAIA.”