Fluctuating Stocks and Unpaid Leave: Here's How the Coronavirus Has Affected GCC Economies

The coronavirus outbreak has undoubtedly left its trace on every aspect of the world during that last three months, and the GCC has been no exception.

Even though the coronavirus emerged in the Chinese city of Wuhan last December, it has spread to different parts of the world and has massively affected all business sectors, including the stock markets, aviation, tourism, oil crude, and many international business-related events and conferences.

World economies are increasingly witnessing record lows amid growing fears of the near-pandemic disease that has killed more than 3k people worldwide so far, while experts are issuing very serious warnings over chances of a global economic depression mostly evident in slumping oil prices and fluctuating stock markets.

In the GCC region, markets are bracing for a tough year, in a region where most economies rely heavily on oil production, despite their measures to diversify economic resources over the last few years.

The looming impact of the virus could be bigger than anticipated, which is why the Central Bank of the United Arab Emirates has called for a meeting to reassess its forecast for economic growth in 2020.

Stocks

In the GCC, most stock markets have suffered great losses over the past week. Kuwait, the country with the biggest number of confirmed Covid-19 cases in the GCC, had to halt trading on Sunday after more than a 10% drop. 

Over the past two days, all Gulf stock markets were able to achieve a slight recovery ranging between 0.4% and 2.8%.

Nonetheless, experts are urging investors to be careful with their expectations as full recovery is strongly linked to the not yet achieved success of virus containment measures.

Oil Prices 

Even before the first Covid-19 cases in the Middle East, oil prices seemed to drastically fall, largely impacted by travel restrictions and most factories being shut down for weeks in China.

The US crude has dropped by about 12% since the World Health Organization announced the Wuhan coronavirus an international emergency last January.

In their efforts to tackle the continuous decline in oil prices, members of the OPEC+ are planning an emergency meeting that is supposed to address oil production rates worldwide.

Aviation

Due to mass flight cancellations and travel restrictions imposed on several countries with widespread of the novel coronavirus, the aviation sector seems to be one of the biggest losers of the outbreak. 

China, the world's second-biggest aviation market has triggered tremendous losses, as many countries around the world have stopped flights heading to Chinese cities.

The International Air Transport Association IATA has forecasted nearly $30 billion loss of revenue in 2020.

Reuters reported that Emirates Airlines asked its staff members to take unpaid leaves up to a month after the UAE government has suspended flights to Iran, Bahrain and to most of China.

The rapid spread of the coronavirus has also led to cancellations of many major international events and conferences and left many other events in the air, most notably the MWC Barcelona.

Moreover, Qatar canceled Dimdex Defense Exhibition while the UAE canceled the Ultra Music Festival.

In an unprecedented announcement made last week, Saudi Arabia suspended Umrah pilgrimage visas, stopped issuing visas for residents of China, and banned both citizens and residents from traveling to China.