UAE, Bahrain make a strong start to vaccine rollout than other GCC states

However, impact of the pandemic weighs on UAE's banking sector: Capital Economics

  
COVID-19 vaccine samples. Image used for illustrative purpose.

COVID-19 vaccine samples. Image used for illustrative purpose.

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Governments across the Middle East and North Africa have begun the roll out of COVID-19 vaccines with the UAE and Bahrain making a particularly strong start, having already administered vaccines to around 26 percent and 8 percent of their populations, respectively.

In the meanwhile, the UAE’s economic recovery has struggled to gain much momentum, even with the influx of tourists in December. Hotel occupancy rates rose to their highest since the start of the pandemic, but remained well below pre-virus levels. The impact of the pandemic has weighed on the banking sector, with private sector credit growth having slowed sharply and more loans turning bad on banks’ books, said William Jackson in a report by the London-based consultancy, Capital Economics.

In the rest of the Gulf, vaccination programmes have been slower to get going – Saudi Arabia has only vaccinated 0.8 percent of its population but, with more vaccines being approved, there are hopes that this can be ramped up. This should mean that recoveries receive a leg-up sooner than in the rest of the region.

Outside of the Gulf, the roll out has been even more sluggish. Egypt, Jordan, and Morocco have only just begun their programmes and, in most cases, reaching herd immunity may take many years.

In Saudi Arabia, data released over the past month showed that the pandemic has inflicted severe damage on the labour market, with the unemployment rate close to a record high in Q3. Activity indicators suggest that the non-oil sector is struggling to gain momentum and the voluntary 1 million barrels oil output cut in February and March has dampened the near-term outlook for the oil sector.

In the rest of the Gulf, the three-year blockade on Qatar came to an end this month but, while this will help to strengthen political ties in the region, it will have a limited impact on Qatar’s economic recovery. Elsewhere, recoveries in Kuwait, Bahrain, and Oman are likely to be hindered by tight fiscal policy – particularly in Oman, where a value-added tax is set to be introduced in April.

(Writing by Brinda Darasha; editing by Daniel Luiz)

brinda.darasha@refinitiv.com

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