Dubai: Leading management consultancy Oliver Wyman warns that the resulting impact of the Coronavirus (COVID-19) outbreak on the global economy could lead to reduced borrowing and lending that will affect banks with a bearing on corporate and personal finance in Dubai and the Middle East.
The Middle East has shown resilience demonstrating the ability to weather previous outbreaks diligently including the Middle East Respiratory Syndrome (MERS) in 2012 however, today the region faces new challenges with the outbreak of COVID-19. Growing anticipation of a cyclical economic downturn accelerated by the impact of COVID-19 has worsened credit quality and limited funding, placing greater pressure on the liquidity of financial institutions, particularly banks.
The Central Bank of the UAE (CBUAE) earlier this week formally requested banks to implement measures to counteract the effects of COVID-19 including rescheduling loans, offering temporary deferrals on monthly loan payments and reducing fees and commissions.
The banking sector requires capital to lend in order to function and operate a sustainable business. For companies and individuals, credit quality reflects their ability to repay debt. Poorer credit quality increases the reliance on the banking sector to provide loans and fund development, placing greater pressure on liquidity levels.
Impaired liquidity in the banking sector limits funding, which could raise a barrier toward business growth and personal finance relief that could lead to a detrimental cycle in the region.
COVID-19, officially declared as a global emergency by The World Health Organization (WHO), continues to evolve with far-reaching effects on people worldwide. More than 5,000 cases have been recorded across the Middle East, most of which in Iran that follows China, South Korea and Italy in the number of new confirmed cases at more than 1,200 and almost 130 deaths*. Several cases have also been confirmed in the UAE. The outbreak has depressed global financial markets and had severe implications on trade, supply chains, and economies globally, subsequently deteriorating cash flows in sectors such as tourism, travel and hospitality, most impacted by the outbreak.
Oliver Wyman believes the global economic impact of the COVID-19 outbreak depends on its duration, how far it spreads and the extent quarantine disrupts the labour market.
For more Oliver Wyman perspectives on Coronavirus please visit: www.oliverwyman.com/coronavirus
*Editor’s note: WHO numbers correct at the time of filing this alert and will have changed by the time of publication
-Ends-
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in 60 cities across 29 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 5,000 professionals around the world who work with clients to optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit www.oliverwyman.com . Follow Oliver Wyman on Twitter @OliverWyman.
Contact
Chase Burns
Four Communications
Email. oliverwyman@fourcommunications.com
Tel. +971 (0)58 821 8735
Disclaimer: The contents of this press release was provided from an external third party provider. This website is not responsible for, and does not control, such external content. This content is provided on an “as is” and “as available” basis and has not been edited in any way. Neither this website nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this press release.
The press release is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither this website nor our affiliates shall be liable for any errors or inaccuracies in the content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the information within this article is at your sole risk.
To the fullest extent permitted by applicable law, this website, its parent company, its subsidiaries, its affiliates and the respective shareholders, directors, officers, employees, agents, advertisers, content providers and licensors will not be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, including without limitation, lost profits, lost savings and lost revenues, whether in negligence, tort, contract or any other theory of liability, even if the parties have been advised of the possibility or could have foreseen any such damages.
