The Gulf steps up its response to coronavirus Covid-19
Gulf central banks have unveiled big stimulus packages but commercial banks need to transmit this to the real economy – difficult to do when appetite for credit is so low.
Over the weekend, the Gulf region stepped up its response to coronavirus, announcing big central bank and government stimulus packages. Analysts, though, are urging the UAE’s commercial banks to do more to support the real economy.
Outside of Iran, only one death in Bahrain has been recorded, but Gulf governments are stepping up measures to contain the spread of Covid-19.
The UAE’s central bank and the Saudi Arabian Monetary Authority announced Dh100 billion ($27.3 billion) and SR50 billion ($13.3 billion) programmes respectively, while Qatar’s government unveiled a QR75 billion ($20.5 billion) economic package. The governments of Dubai and Abu Dhabi also responded with a series of measures to help domestic economies.
The stimulus comes at a time when Gulf economies are suffering from the double shock of low oil prices and the global slowdown in growth and trade because of the pandemic.
Analysts say the UAE’s Dh100 billion targeted economic support scheme is positive for the financial sector, but are unconvinced that measures to stimulate bank lending are the most effective policy.