The economy of the United Arab Emirates as well as those of other states in the Gulf could be adversely affected by the outbreak of the coronavirus in China.
Analysts at rating agency Standard & Poor’s say that the growth prospects of the region could face serious implications as a result of the importance placed on the Chinese economy in terms of international economic activity.
Between 4% and 45% of the total goods exports of countries in the GCC is accounted for by China, with Oman potentially the most at risk.
Unless the recent travel restrictions imposed because of the virus are lifted, the hospitality industry in the GCC could also face big problems, particularly in Dubai, which was visited by a million Chinese tourists last year.
However, the rating agency believes that the virus will likely be contained by next month and will therefore have a limited impact on the whole of the GCC, enabling restrictions to be lifted and causing little impact on the price of oil.
If the virus is not contained and continues to spread, however, the analysts fear that the result will be an increase in economic uncertainty and serious credit implications all over the world.
A fall in oil prices could be the result in the GCC, as well as a drop in real estate prices and economic growth and changes to government spending.
The hospitality industry could also be seriously impacted by a continuation of the virus outbreak.
Airline, retail and hotel sectors in the UAE and GCC could feel short-term impacts, with 1.4 million tourists from China having visited the latter in 2018, a figure that had been projected to reach 2.2 million within another two years.
Lower tourist arrival figures could be caused by the virus in the GCC, however, particularly in the UAE.
3.9% of all the passengers that passed through Dubai International Airport two years ago came from China.
Of the six GCC nations, the UAE has the biggest contribution from Chinese tourists to tourism, airline traffic, real estate investments and retail spending.
Dubai is also set to host Expo 2020, which will begin later this year in October.
25 million visitors are expected to visit the Expo over the course of its scheduled six-month run.
The virus should have been contained long before the Expo begins, so analysts with Standard & Poor’s believe that the current outbreak is unlikely to adversely impact on the event or the number of visitors it receives.
Property buying could experience some indirect impact from the virus.
A relatively low number of Chinese nationals actually own property within the GCC, and in the UAE the exposure is approximately $460m.
Decisions may be postponed by some Chinese nationals due to the outbreak, analysts say.
Anyone who is intending to travel to the UAE or anywhere else in the GCC should take out travel insurance in order to be guaranteed financial protection in the event of postponed or cancelled flights or falling ill while overseas.