Dubai: The Central Bank of UAE (CBUAE) on Saturday asked banks to reschedule loans and reduce fees and commissions as part of measures to mitigate the economic effects of the coronavirus outbreak.
The country is a regional business hub and major transit point for passengers travelling to China and other destinations in Asia.
"Financial institutions are expected to implement measures such as re-scheduling of loans contracts, granting temporary deferrals on monthly loan payments, and reducing fees and commissions for affected customers," Reuters quoted a central bank said statement .
Economies of the UAE and other GCC countries will be adversely impacted by the recent outbreak coronavirus in China, according to rating agency Standard & Poor’s.
S&P analysts said they expect implications of the new coronavirus outbreak could weigh on growth prospects in the GCC given the importance of the Chinese economy to global economic activity.
China contributes between 4 per cent and 45 per cent of GCC countries' total good exports, with Oman being the most exposed.
“Virus-related travel restrictions, if not lifted as we expect, could weigh on the GCC's hospitality industry, but more so in Dubai, which received almost 1 million visitors from China in 2019,” said Mohammad Damak, Director of Research at S&P.
The rating agency expects the impact will be limited for GCC as a whole, assuming the virus will be contained in the near future, allowing travel and other restrictions to be unwound in the second quarter, and there's no major impact on oil prices.
For the GCC, it could result in a drop in oil prices, economic growth, and real estate prices, alongside a decline in government spending.
While the negative impact on oil prices are expected to be short term in nature, the rating agency said the impact will be visible in terms of export volumes in response to a projected slowdown in the Chinese economic growth from 6.1 per cent in 2019 to about 5 per cent in 2020.
Banks and financial institutions across the GCC are expected to experience relatively muted impact of the coronavirus in China, according to rating agency Standard & Poor’s (S&P).
“We expect the impact of the new coronavirus on banks to be low, and come indirectly through the overall impact on GCC economies, which we expect to be minimal,” said Mohammad Damak, Director of Research at S&P
The banks in GCC have little direct exposure to Chinese companies. However, should the outbreak put pressure on important sectors, such as real estate, the effects could surface in the next few months. This is particularly relevant for banks in the UAE.