Global ratings agency Fitch Ratings said its stable outlook for the GCC corporate sector in 2021 reflects the likely stability of oil prices throughout 2021 and improved GDP compared to 2020.
Fitch, in a new report, said the expected re-opening of travel and tourism – sectors that contributed nearly 8-9 per cent of regional GDP in 2019 – is likely to result in some economic recovery in the GCC countries, although short of 2019 levels.
‘We expect the post-pandemic recovery to be relatively slow among some GCC economies in light of increasing fiscal deficits. Most GCC corporates have reduced their capex budgets for 2020, before a gradual increase in 2021,’ the ratings agency said.
It added that dividends, however, will be subject to further reductions as companies increasingly focus on discretionary free cash flow.
‘We expect most sectors in the GCC to experience a gradual increase in demand in 2021, partially supported by selective government spending,’ Fitch said.