Some financial institutions in the region are advocating the need for investors to explore new opportunities in the global economy in light of the COVID-19 pandemic, as well as the decline in interest rates offered by banking institutions.
As for governments, they urge countries to refocus their energies on economic diversification in line with previous economic policy, as well as invest in digital transformation, technologies and industries that serve national needs, including food security, technology, and innovation in health care and medical technology.
There are several projections for the remaining months of the current year according to the report issued by Mashreq Bank, that deals with the most prominent investment trends and emerging developments in world and regional markets in light of the difficulties caused by the decline in oil prices, and pandemic-related impacts for the economy as a whole.
There are several developments cited in the report that have had an impact on the economies of the region and the world. Global growth was projected to rise from 2.9 per cent in 2019 to 3.3 per cent during 2020.
But the trade wars between America, the world, and China had a great impact on the global economy, at a time when the world was surprised by the uncontrolled spread of the coronavirus, which led to the disruption in the global business as a result of the closure of many productive and economic sectors, especially in the field of aviation, hospitality, restaurants, retail, service and labour industries, among others, leading to massive unemployment across the world.
The closure of institutions also led to a sharp slowdown in the growth of global economic output, which declined by 12 per cent in the first quarter of this year, while the International Monetary Fund expects a contraction of the global economy by 4.9 per cent this year, representing the largest slowdown in the global economy since the 1930s.
Most of the countries in the region and the world are now working to reform their economies having run up huge deficits in the face of reduced revenues, which has affected spending and investment, leading to a slowdown or decrease in economic growth.
As a result, most of the GCC countries have experienced a decline in their credit ratings due to the double whammy of the strict closure of sectors on the one hand, and the decline in international oil prices on the other hand, which has directly affected the public budgets of governments that remain under severe financial pressures.
The report of the banking corporation recommends that investors (without commitment) consider investing in preferred stocks and bonds, along with a cautious and prudent approach in choosing assets and securities, while maintaining sufficient diversity of these assets, and accelerating investment in the fields of cloud computing, artificial intelligence, digitisation and e-commerce.
This must be done during the coming period.
Haider al Lawati
haiderdawood@hotmail.com
Oman Observer is now on the WhatsApp channel. Click here
