GCC Economy

Importance of SMEs in GCC: Challenges amid COVID and way forward

Interview with Mr. M.R.Raghu, CEO, Marmore MENA Intelligence Are SMEs very important for the GCC region? How have SMEs contributed to the region? Small-to-Medium Enterprises (SMEs) are vital to the economic development of the country as they foster innovation, entrepreneurship and create large-scale employment opportunities. The subject of SMEs touches upon many aspects of a nation’s economic network. By its very nature, SMEs can sprout up anywhere along the output value chain of a country, ranging from small shops to...

How can GCC Banks reset for growth beyond COVID-19?

Interview with Mr. M.R.Raghu, CEO, Marmore MENA Intelligence How GCC banks reset for growth beyond the COVID-19 crisis? The performance of the GCC banking sector had already started to get impacted before the coronavirus pandemic on account of global economic issues, however, the whole situation got exacerbated rapidly on account of the pandemic. For instance, UAE listed banks’ cumulative net income in 2020 witnessed the first negative growth in over 5 years, falling by 42% over 2019 on account of...

IMF forecasts steeper fall in GCC countries’ 2020 GDP

As the world charts its recovery from COVID-19’s impact amidst the resurgence of cases in some countries and lingering threat of spike in others, the countries’ recovery path and economic outlook are being closely watched. IMF in its recent World Economic Outlook (October 2020) has revised GDP forecasts for GCC countries downwards from its April forecast, citing deeper-than-expected impact of lockdowns on mobility and weak global growth. For GCC as a whole, IMF expects GDP to contract by 6% in...

COVID-19 derails traditional Kuwait retailers

Kuwait’s retail sector is small in absolute terms when compared to regional peers like the UAE or Saudi Arabia. However, Kuwait has one of the highest concentrations of international retailers in the GCC, with luxury segment proving to be a major draw. The value of Kuwait’s retail market was KD 3.5bn or 9.1% of non-oil GDP, as of February 2018 (Oxford Business Group). Consumer preference towards international brands and better retail shopping experiences were exhibiting an upward trend until COVID-19...

Will COVID-19 increase the Cost of Capital in the GCC?

Cost of Capital represents the opportunity cost of all financial capital, primarily debt and equity, invested in an enterprise. ‘Opportunity cost’ also referred to as ‘hurdle cost’ or ‘discount rate’, is of primary importance in valuation and helps investors in arriving at the correct price of a company’s stock. Given the importance of this metric in creating value for shareholders, it is essential to compare the cost of capital for the GCC countries over the years. Key Points to be...

Has Coronavirus cases peaked in the World and GCC

The outbreak of novel Coronavirus across the globe, which affected lives of millions of people continues to take its toll on the global economies. With more than 7-8 months into the crisis the virus is still omnipresent. It forced countries to adopt control measures like lockdown, curfew, social distancing, masks etc. As a result of which many countries have been successful in curbing the rate of spread and have also moved past the peak in terms of maximum confirmed cases...

Estimating Corporate CapEx in Saudi Arabia

COVID-19 has been a double whammy for the Saudi Arabian economy. First, the lockdown and curfew measures has affected the economic activity. Second, because of global lockdown, oil prices fell with the demand for oil falling sharply. Therefore, the output of Saudi corporate sector is also expected to be very much low for the year 2020 if not beyond. Average Fixed Capital Assets held by Saudi Listed Companies(2015-2019) Saudi listed companies held fixed capital assets measured by the average outstanding...

Defensive sectors in GCC-A great bet in today’s times

The 2020 stock market crash due to Covid-19 has been fast and short, if the markets do not fall to the lows of March 2020 again. The Oil price crash and social distancing measures to prevent the spread of Covid-19 has impacted sectors in the GCC in different ways.This can be observed in the current level of GCC Sector Indices. We make a comparison of the current levels of GCC sector indices with that of 52-week high and 52-week lowto...

How has liquidity in Saudi Tadawul fared during COVID-19?

Liquidity is one of the key indicators of a stock market and is a fundamental requirement for market efficiency. In recent years, Saudi Arabia’s equity market has implemented reforms, such as relaxation of foreign ownership and has achieved milestones such as inclusion in key indices including the MSCI Emerging Market Indices. With the listing of Saudi Aramco, it has also become one of the top 10 markets globally, by market capitalization. Given the market’s importance in GCC and globally, the...

COVID-19 brings to the fore GCC’s Fiscal Vulnerability

Revenue from oil forms significant portion of overall revenue for GCC countries, with 20-year(2000-2019) average at 74%. This dependence on oil as revenue source has long been a pain point for GCC’s fiscal position, surfacing during periods of low oil prices and receding during periods of high oil price.In the backdrop of fall in oil prices due to COVID-19, building a sustainable fiscal policy in GCC has resumed higher importance. Ascend to Prosperity Referred to as black gold, oil has...