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Standard & Poor’s Ratings Services believes that the Gulf economies remain insulated from economic and political turbulence both in the broader MENA region and globally.
This is according to a report entitled The Gulf Economies Are Going Strong, But Structural Issues Still Weigh On The Sovereign Ratings”, published on Ratings Direct on the Global Credit Portal.
It says, “We rate seven sovereigns in the Gulf Cooperation Council (GCC): Abu Dhabi, Bahrain, Kuwait, Oman, Qatar, Ras al Khaimah, and Saudi Arabia. All have a stable outlook.
“However, despite the GCC’s relative wealth, and our forecast for 4.6 per cent GDP growth in 2013, structural challenges continue to constrain sovereign ratings.”
“There are still particular shortcomings in the effectiveness and predictability of policymaking in the GCC,” said Standard & Poor’s credit analyst Dima Jardaneh. “Weaknesses include the quality of policy debate; the strength and depth of institutions; transparency of decision-making; data monitoring and reliability of information; legal frameworks and the rule of law; and succession risks.”
The report also notes the possibility that oil reserves could peter out in some GCC countries much earlier than in others.
“The oil endowment varies significantly across the GCC,” said Jardaneh. “Reserves at current production levels will last about 90 years in Abu Dhabi and Kuwait and 70 years in Saudi Arabia, but are considerably lower in Oman and Bahrain where, at current production levels, supplies could run out in the next two decades.”
