Moody’s Downgrades Banking Sectors of 5 GCC Countries to Negative

In a report issued on the 2nd of April 2020, Moody's Investors Service (Moody’s) has downgraded its outlook from stable to negative for the banking systems of the United Arab Emirates (UAE), Saudi Arabia, Qatar, Bahrain and Kuwait while maintaining its negative outlook on Oman’s banking system. These downgrades have been made considering the impacts of falling oil prices as well as the impact of COVID-19 on these countries.

With the oil price being below the desirable level for Gulf Cooperation Council (GCC) states to balance their budgets, Government revenues are anticipated to fall leading to reduced Government spending. This is expected to hinder the growth in the non-oil sector, where the banks do most of...