Travel restrictions due to the coronavirus outbreak in the Gulf region might pose the biggest risk to the hospitality and tourism industry of Dubai, the capital of the United Arab Emirates (UAE), according to analysts at ratings agency S&P Global.
All members of the Gulf Cooperation Council (GCC), including Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman – stand to suffer from the travel restrictions, but Dubai’s business hub could see the biggest impact.
The S&P said that virus-related travel restrictions could weigh on the GCC’s hospitality industry, but much more in Dubai, the city which received about one million visitors from China last year.
Senior Director for S&P Middle East & Africa financial institutions Mohamed Damak said that there would surely be an impact on the number of visitors to the region, as well as investments and potentially commodity prices if the coronavirus is not contained by March while travel restrictions remain. In such a situation, the number of attendants at Expo 2020 Dubai will also drop. Dubai hoped to attract 11 million foreign visitors for the six-month event that will kick off in October.
The coronavirus has killed over 2,200 people and infected over 75,000 and hasn’t shown convincing signs of peaking. In the UAE, there have been nine confirmed cases of the virus. Most of the people infected are Chinese nationals.
Director of the International Monetary Fund’s Middle East and Central Asia Department Jihad Azour said that it is too early to forecast the impact of the new coronavirus on economic growth in the Gulf.
S&P analyst Zahabia Gupta said the economic downside risks of Oman were higher this year due to weaker oil demand and its exposure to China. About 45% of Omani exports go to China, making it the most exposed of the Gulf states to developments in that country.
Gupta also said that fiscal deficits in Gulf will rise next year due to expected higher spending, lower oil prices, and weak growth, adding that the fiscal deficit of Saudi Arabia could hit 7.4% of GDP this year and rise to 8.1% in 2021.