Most GCC countries are resilient enough to weather the coronavirus storm, Oxford Economics said and noted restrictive measures have been in place for several weeks in the region to contain the rise in Covid-19 cases.
On average, the GCC economies have a smaller share of people aged 65 and above and also a better-equipped healthcare system to handle potential large outbreaks of the virus.
“With strict lockdown measures in place, we expect the threat from a largely urbanised population to be contained, at least in the short run,” Oxford Economics said.
Recent forecasts suggest substantial economic impacts across the region and Oxford Economics expects “the magnitude of these to be determined by the extent and length of the restrictions, as well as each country’s structural economic vulnerability to the outbreak.”
The GCC countries have already announced fiscal measures to counter the economic shock of the severe containment, which it expects will counter the shortfall in oil receipts at least in the short run.
Containment measures are now broadly consistent across the region, with many countries implementing total lockdowns, Oxford Economics said. Iran has the highest number of confirmed cases at around 65,000.
However, reported numbers across the region remain relatively low as most Middle East countries have been quick to act, with many Arab states relying on the military to enforce draconian measures to avoid cases spiralling to levels seen in Europe.
“Containment measures have already strangled the Mena economy. We now see non-oil GDP growth, even in the GCC — the most resilient economies in the region — falling by 2.4%, with risks on the downside depending on any extension of the current lockdowns,” Oxford Economics said.
Moreover, it expects second-order effects to depend on the structural resilience of the region.
"Similar to the analysis on European countries in a prior note, but with the additional dependancy on sharply lower oil prices, we assess the magnitude of second order effects by analysing the vulnerability on five key factors: the shock to supply chains; the capacity of public health systems; the shock to labour supply, sectoral composition; and oil dependency."
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