Bogoljub Karic On How the Coronavirus May Impact Middle Eastern Economies

Bogoljub Karic shares his thoughts on the coronavirus's effects on the Gulf economies' oil prices, capital markets, and tourism. So far, the global pandemic has found its way to 110 countries and has infected about 121,000 people. Iran is the most hit among the Middle Eastern countries with 9,000 confirmed cases of OOVID-19 and about 350 fatalities. Bahrain, Saudi Arabia, Oman, and the UAE have also reported several cases of infection. The impact of the disease on the economies of these countries are pronounced in these aspects:

Oil Prices

Oil is one of the major exports of the Middle east. Bogoljub Karic notes that its price plunged tremendously last week as the Organization of the Petroleum Exporting Countries and its allies fell short of reaching an agreement to trim output. This is an obvious problem for Gulf countries, which depend heavily on crude revenues.

Travel and Real Estate

Foreign spending in Saudi Arabia and the UAE is likely to be impacted by the outbreak as well. On average, 20 million tourists travel to Saudi Arabia annually, mostly for religious reasons. Because of COVID-19, all flights to and from the Kingdom have temporarily been suspended. Meanwhile, the UAE averages about 16 million visitors yearly, with 25 million expected this year in anticipation of the Expo 2020 Dubai, which is slated for October. Bogoljub Karic stresses that as of now, it is still uncertain whether the world expo will be affected by the virus as well. As for real estate, Chinese buyers made up 1% of Dubai's property transactions in 2018. The psychological effect of the COVID-19 outbreak may put off purchasing decisions despite plunging interest rates.

Capital Markets

Capital markets have been experiencing extreme volatility. Companies with weak credit scores will experience a hard time coping with the market. This means that Oman, Bahrain, and some UAE corporations may find it difficult market-wise this year. In light of these forecasts for the region, Bogoljub Karic encourages business owners and the public to keep calm and remain vigilant. Things are expected to be on an upward trend once the COVID-19 pandemic is contained.