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Nine Months into the COVID-19 Pandemic — How are the GCC Countries Coping?

by Sophie Smith

Since the first COVID-19 case was identified in Wuhan, China in December 2019, the virus has spread around the globe. The first case in the Gulf region was identified in the United Arab Emirates (UAE) on 2 February 2020, followed by Oman, Kuwait and Bahrain. From the outset of the pandemic, the GCC (Gulf Cooperation Council) countries have been relatively swift in their responses, imposing border restrictions and nationwide lockdowns to curb its spread. Nine months into the pandemic, the Gulf countries have adopted a range of health and economic measures to cope with the pandemic and its impact.

 

Lockdowns

Even before COVID-19 reached their respective countries, the Gulf countries implemented a set of measures to prevent its contagion. Travel to China and other coronavirus hotspots were limited and task-forces were set up to deal with the virus, such as the Saudi COVID-19 Follow-Up Committee.[i] Once the first cases reached the region, the governments took further measures, imposing nationwide lockdowns (except Qatar), alongside temporary full-border closures (except Bahrain).[ii] In March, curfews were introduced as non-essential shops, religious institutions, hospitality and entertainment venues closed, while work and education institutes went online. Public gatherings were also banned, except for in Bahrain, where they were limited, and in Qatar, where it was only recommended. In tandem, in public spaces, it became mandatory to wear masks and social distance. Such restrictions successfully suppressed the spread of COVID-19, which allowed the UAE and Saudi Arabia to ease restrictions by the end of April, followed by Oman, Kuwait and Bahrain by the end of May, and Qatar in mid-June. The measures were relaxed in several phases; initially, limited public gatherings were allowed, and non-essential stores – as well as certain hospitality and entertainment venues in Bahrain and the UAE – reopened.[iii] Moreover, several workplaces and schools resumed their activities in person; although, for example, in Bahrain, some sectors are still required to work remotely, and, in Saudi Arabia and Kuwait, schools remain online.[iv] Borders have slowly reopened across the region.[v] Altogether, these measures have helped the Gulf countries to (largely) avoid further nationwide lockdowns. That said, Bahrain recently introduced restrictions on movement, while Saudi Arabia, Kuwait and Oman closed their borders in light of the new COVID strain.[vi]

 

Health Measures

In conjunction with lockdowns, the GCC countries implemented various health measures to mitigate the spread of COVID-19. Tests became widely available at no cost; particularly, the UAE and Bahrain introduced mass testing, exceeding a million tests per million individuals.[vii] Each Gulf country also introduced contact tracing apps, including Oman’s Tarassud Plus app, Kuwait’s Shlonik app, Qatar’s Ehteraz app and Bahrain’s BeAware app. Saudi Arabia and the UAE unveiled several apps designed to track cases and enforce self-quarantine for those with COVID-19.[viii] Additionally, the capacities of the healthcare sector increased; for example, Oman opened an additional hospital and Saudi Arabia increased its production of medical supplies.[ix] More recently, several GCC countries are rolling out vaccines to the public and Bahrain was the second country in the world to approve the Pfizer-BioNTech vaccine in early December.[x]

 

Between 15-22 December, no Gulf country – except the UAE (8,611 cases) – recorded above 2,000 cases.[xi] However, cases have slightly risen from the previous week, except in Kuwait, where they fell by 4.86 percent.[xii] In terms of deaths, no Gulf country recorded over 75 deaths in the past week with Bahrain and Qatar registering only two new fatalities.[xiii] In fact, Qatar, the UAE and Bahrain are among the top five countries with the lowest case-fatality rate globally.[xiv]

 

Economic Measures

The pandemic has generated considerable economic challenges for the region as consumer spending fell and unemployment rose, on top of the significant drop in oil prices, which the countries still heavily depend on.[xv] Accordingly, GCC governments have introduced a range of economic measures, which largely remain in place. Back in March, Bahrain announced a BD 4.3 billion (EUR 9.4 billion) stimulus package to support private companies, which includes fee waivers and the payment of 50 percent of salaries in affected sectors until the end of December.[xvi] Saudi Arabia’s SAR 120 billion (EUR 26.4 billion) stimulus package, which was extended until the end of January 2021, mirrors this, providing support to financial institutions and small- and medium-sized enterprises (SMEs).[xvii] Kuwait and Qatar introduced similar measures in March worth KD 5 billion (EUR 13.5 billion) and QAR 75 billion (EUR 17 billion) respectively.[xviii] Oman’s OMR 8 billion (EUR 17.2 billion) package, in particular, offers tax relief and other exemptions to businesses in the form of deductions and deferrals.[xix] The UAE too announced various measures to combat the economic impact of COVID-19; most recently, the UAE Central Bank extended the AED 100 billion (EUR 22.5 billion) Targeted Economic Support Scheme (TESS) for the banking sector until the end of June 2021.[xx]

 

While such measures have helped limit the economic fallout from COVID-19, the GCC economies have, nevertheless, suffered, as has the rest of the world. To afford the stimulus packages, the governments have had to reduce expenditures in other sectors. Bahrain cut non-priority government agencies expenditure by 30 percent, and some capital expenditure was delayed, while Kuwait cut its budget by 25 percent and Qatar announced a 16 percent cut.[xxi] Oman reduced its budget by 10 percent, as did Saudi Arabia, which also tripled the Value Added Tax (VAT) to 15 percent.[xxii] Indeed, COVID-19 has led to rising levels of national debts as a percentage of GDP. Although Saudi Arabia (34.4 percent), Kuwait (36.6 percent, up from 19.3 percent in 2020) and the UAE (38.2 percent) are expected to maintain relatively low government debt levels in 2021, Qatar’s debt level is predicted to fall to 60.6 percent of GDP, while Oman and Bahrain are expected to reach 88.7 percent and 130.6 percent respectively.[xxiii] On top of this, the economy of each country has contracted in 2020; Qatar’s GDP was estimated to contract the least out of the GCC countries (by 4.5 percent), followed by Bahrain (4.9 percent), Saudi Arabia (5.4 percent), the UAE (6.6. percent) and Kuwait (8.6 percent).[xxiv] Oman saw the most significant contraction to its GDP of 10 percent. In fact, unlike its GCC counterparts, Oman’s economy is estimated to continue contracting in 2021 by 0.5 percent.[xxv]

 

COVID-19 Encourages Digital Initiatives

Despite such seemingly dim outlooks, however, the Gulf countries have taken hold of several opportunities, particularly in promoting digital initiatives. Saudi Arabia, for example, launched a COVID-19 Hackathon to generate innovative solutions to combat the virus, which simultaneously supports a new generation of entrepreneurs and economic development.[xxvi] The UAE’s QuantLase Imaging Lab developed laser-based testing using Artificial Intelligence (AI) to detect COVID cases, and Bahrain deployed robots in the healthcare sector to help protect its medical personnel and decrease the spread of the virus.[xxvii] In addition, the GCC countries have placed an emphasis on start-ups and SMEs as part of their stimulus measures to create a new wave of entrepreneurs to help boost the post-COVID economy. As a result, start-ups in the region have substantially risen throughout the pandemic; for instance, in Bahrain, individual commercial registrations grew by 109 percent this June.[xxviii]

 

***

All in all, the GCC countries have fared relatively well throughout the pandemic, avoiding a second national lockdown as has been the case across Europe. That said, the countries are facing significant economic costs from COVID-19 as their debt levels rise and economies contract. In spite of this, there are several economic opportunities, which the Gulf countries can capitalise on, particularly in supporting entrepreneurship and the tech industry, which will set the tone for the post-COVID economies.

28 December 2020

 

References

 

[i] Saudi Press Agency. “Novel Coronavirus COVID-19 Follow-up Committee Holds its 9th Meeting.” Saudi Press Agency, February 28, 2020. https://www.spa.gov.sa/2040611.

[ii] Bahrain Ministry of Health. “Government Executive Committee introduces additional precautionary measures to curb the spread of Coronavirus (COVID-19).” Bahrain Ministry of Health, March 17, 2020. https://www.moh.gov.bh/COVID19/Details/3967; Qatar Government of Communication. “Government Communications Office statement regarding measures taken by the State of Qatar to combat Coronavirus (COVID-19).” Qatar Government of Communication, March 12, 2020. https://www.gco.gov.qa/en/2020/03/12/government-communications-office-statement-regarding-measures-taken-by-the-state-of-qatar-to-combat-coronavirus-covid-19/; Kuwait News Agency. “Kuwaiti Cabinet Restricts Public Gatherings to Contain COVID-19.” Kuwait News Agency, March 10, 2020. https://www.kuna.net.kw/ArticleDetails.aspx?id=2875093&Language=en; Oman Ministry of Health. “Supreme Committee Issues New Decisions on COVID-19.” Oman Ministry of Health, March 22, 2020. https://www.moh.gov.om/en/-/--1281; United Arab Emirates Ministry of Health & Prevention. “UAE Government announces closure of leisure sites, preventive measures for Fand B outlets for two weeks.” UAE Ministry of Health & Prevention, March 21, 2020. https://www.mohap.gov.ae/en/MediaCenter/News/Pages/2341.aspx; Unified National Platform. “Custodian of the Two Holy Mosques issues curfew order to limit spread of Novel Coronavirus for 21 days.” Unified National Platform, March 22, 2020. https://www.my.gov.sa/wps/portal/snp/pages/news/newsDetails/CONT-news-230320201.

[iii] Emirati News Agency. “Supreme Committee of Crisis and Disaster Management announces partial easing of restrictions on movement in Dubai.” Emirati News Agency, April 24, 2020. https://www.wam.ae/en/details/1395302838726; Saudi News Agency. “Custodian of the Two Holy Mosques Orders to Lift the Curfew Partially in all Regions of the Kingdom, Except Makkah and Isolated Districts.” Saudi News Agency, April 26, 2020. https://www.spa.gov.sa/viewfullstory.php?lang=en&newsid=2078975; Kuwait News Agency. “Kuwait begins gradual return to normal life May 31 – PM.” Kuwait News Agency, May 28, 2020. https://www.kuna.net.kw/ArticleDetails.aspx?id=2897081&Language=en; Bahrain Ministry of Health. “HRH the Crown Prince highlights the Kingdom’s continued commitment to combating COVID-19.” Bahrain Ministry of Health, May 21, 2020. https://www.moh.gov.bh/COVID19/Details/4222; Oman Observer. “Muscat lockdown lifted, Muttrah still in isolation.” Oman Observer, May 27, 2020. https://www.omanobserver.om/muscat-lockdown-lifted-muttrah-still-in-isolation/. Qatar Ministry of Public Health. “Controlled Lifting of COVID-19 Restrictions Plan.” Qatar Ministry of Public Health, n.d. https://covid19.moph.gov.qa/EN/Precautions-for-lifting-restrictions/Pages/default.aspx.

[iv] Reuters. “COVID-19 Tracker.” Reuters, n.d. https://graphics.reuters.com/world-coronavirus-tracker-and-maps/.

[v] Reuters. “COVID-19 Tracker.”

[vi] Reuters. “COVID-19 Tracker;” Al Amir, Khitam and Yasmena Al Mulla. “Saudi Arabia, Kuwait, Oman close borders over new COVID-19 strain.” Gulf News, December 21, 2020. https://gulfnews.com/world/gulf/saudi-arabia-kuwait-oman-close-borders-over-new-covid-19-strain-1.76045399.

[vii] WorldOMeters. “Reported Cases and Deaths by Country, Territory, or Conveyance.” WorldOMeters, n.d. Accessed December 6, 2020. https://www.worldometers.info/coronavirus/ - countries.

[viii] Saudi Arabia Ministry of Health. “Apps for your Health.” Saudi Arabia Ministry of Health, n.d. https://covid19awareness.sa/en/apps-for-your-health-2; United Arab Emirates Ministry of Cabinet Affairs. “Initiatives to combat Covid-19.”

[ix] Times of Oman. “Covid-19: Field hospital for treatment of patients opens in Oman.” Times of Oman, October 5, 2020. https://www.timesofoman.com/article/covid-19-field-hospital-for-treatment-of-patients-opens-in-oman; Alshammari, Thamir M et al. “Importance of early precautionary actions in avoiding the spread of COVID-19: Saudi Arabia as an Example.” Saudi Pharmaceutical Journal 28, no. 7 (2020). doi:10.1016/j.jsps.2020.05.005.

[x] Bahrain News Agency. “Bahrain second in the world to approve the Pfizer/BioNTech Covid-19 vaccine.” Bahrain News Agency, December 4, 2020. https://www.bna.bh/en/news?cms=q8FmFJgiscL2fwIzON1+DteRtB2wfPWh%2FOmYUjt6ApY=.

[xi] World Health Organization. “WHO Coronavirus Disease (COVID-19) Dashboard.” World Health Organization, December 22, 2020. https://covid19.who.int/.

[xii] World Health Organization. “WHO Coronavirus Disease (COVID-19) Dashboard.”

[xiii] Ibid.

[xiv] John Hopkins University & Medicine. “Mortality Analyses.”  John Hopkins University & Medicine, n.d. https://coronavirus.jhu.edu/data/mortality.

[xv] Srour, Maged. “How the Gulf States Deal with Coronavirus.” Euro-Gulf Information Centre, April 3, 2020. https://www.egic.info/how-gulf-states-deal-coronavirus.

[xvi] Bahrain Ministry of Health. “Government of Bahrain Announces BHD 4.3 Billion Economic Stimulus Package.” Bahrain Ministry of Health, March 17, 2020. https://www.moh.gov.bh/COVID19/Details/3969; Bahrain Confidential. “Bahrain extends 50% of Bahrainis’ salary payment in coronavirus impacted sectors.” Bahrain Confidential, September 29, 2020. https://www.bahrain-confidential.com/bahrain-extends-50-of-bahrainis-salary-payment-in-coronavirus-impacted-sectors/.

[xvii] Saudi Arabia Ministry of Finance. “With More Than SAR 120 bn: Government of Saudi Arabia Implements Urgent Measures to Mitigate the Impact of Coronavirus on Economic Activities and Private Sector.” Saudi Arabia Ministry of Finance, March 20, 2020. https://www.mof.gov.sa/en/MediaCenter/news/Pages/News_20032020.aspx; Saudi General Organization for Social Insurance. Twitter Post. September 29, 2020, 11:21 am. https://twitter.com/SaudiGOSI/status/1310887300277186560.

[xviii] Kuwait News Agency. “Stimulus Package offers KD 5 bln in Additional Funding – KBA Chief.” Kuwait News Agency, April 4, 2020. https://www.kuna.net.kw/ArticleDetails.aspx?id=2884189&language=en; Qatar e-Government. “HH The Amir Directs the Start of Implementing a Package of Decisions and Measures to Combat the Spread of Coronavirus.” Qatar e-Government, March 16, 2020. https://portal.www.gov.qa/wps/portal/media-center/news/news-details/hhtheamirdirectsthestartofimplementingapackageofdecisionsandmeasurestocombatthespreadofcoronavirus.

[xix] “Oman Government measures to address COVID-19.” KPMG, April 6, 2020. https://home.kpmg/om/en/home/insights/2020/04/Oman Government measures to address COVID-19.html.

[xx] Central Bank of the U.A.E. “CBUAE extends the applicability period of the Targeted Economic Support Scheme (TESS) to enhance the support to retail and corporate banking customers and accelerate the UAE economic recovery from COVID-19 repercussions.” Central Bank of the U.A.E., November 16, 2020. https://www.centralbank.ae/en/node/2348.

[xxi] IMF. “Policy Responses to COVID-19;” Kuwait News Agency. “KOC: Succeeded in cutting 25 pct of Budget, 18 pct of operating budget.” Kuwait News Agency, July 13, 2020. https://www.kuna.net.kw/ArticleDetails.aspx?id=2908447&Language=en; Fitch Rating. “Rating Report: Qatar.” Fitch Rating, July 10, 2020. https://www.fitchratings.com/research/sovereigns/qatar-10-07-2020.

[xxii] Oman Daily Observer. “Oman State Budget 2020 slashed by RO500 million.” Oman Daily Observer, April 19, 2020. https://www.omanobserver.om/oman-state-budget-2020-slashed-by-ro500-million/; Saudi Press Agency. “Saudi Ministry of Finance: additional measures to confront the financial and economic impact of the Coronavirus Pandemic.” Saudi Press Agency, May 11, 2020. https://www.spa.gov.sa/viewfullstory.php?lang=en&newsid=2084883.

[xxiii] IMF. “General Government Gross Debt.” IMF, 2020. https://www.imf.org/external/datamapper/GGXWDG_NGDP@WEO/OEMDC/ADVEC/WEOWORLD.

[xxiv] IMF. “Real GDP Growth.” IMF, 2020. https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD.

[xxv] IMF. “Real GDP Growth.”

[xxvi] COVID-19 Saudi Hackathon, 2020. https://covid19saudihackathon.com/.

[xxvii] United Arab Emirates Ministry of Health & Prevention. “UAE develops a rapid coronavirus laser testing technology.” United Arab Emirates Ministry of Health & Prevention, May 19, 2020. https://www.mohap.gov.ae/en/MediaCenter/News/Pages/2420.aspx; El Sherif, Ahmed. “Autonomous robot targeting COVID-19 virus unveiled in Bahrain.” Healthcare IT News, July 3, 2020. https://www.healthcareitnews.com/news/emea/autonomous-robot-targeting-covid-19-virus-unveiled-bahrain

[xxviii] Bahrain Economic Development Board. “GCC small business ‘boom’ to drive post-COVID economy as commercial registrations soar.” Bahrain Economic Development Board, October 6, 2020. https://www.bahrainedb.com/latest-news/gcc-small-business-boom-to-drive-post-covid-economy-as-commercial-registrations-soar/.