![This picture taken on March 20th shows a view of an almost deserted market in the centre of the Gulf emirate of Sharjah, following government instructions for people to remain at home in efforts to prevent the spread of COVID-19 coronavirus disease. [Karim Sahib/AFP]](/cnmi_am/images/2020/05/15/24093-uae-market-700_496.webp)
Arab stock markets plunged almost a quarter in value in the first three months of 2020 due to the coronavirus (COVID-19) pandemic and the collapse in oil prices, a UN agency said Thursday (May 14th).
"The drop in oil prices and the COVID-19 pandemic resulted in a 23% average loss for major Arab stock markets by the end of the first quarter of 2020," the Economic and Social Commission for Western Asia said.
The twin crises have "shattered the stock market in Arab countries, putting the performance of financial markets below the 2008-2009 collapse", ESCWA said in a report.
It said share price values of the largest banks of the oil-rich Arab states in the Gulf also crashed by 25% in the first quarter of this year.
ESCWA and the Union of Arab Banks said credit to the private sector is expected to contract by $14.5 billion in the six Gulf Co-operation Council states, and by $11.3 billion in non-oil, middle-income countries, totalling a decline of about $26 billion in 2020.
The UN agency said a regional economic revival could be dependent on support from Arab sovereign wealth funds.
"Shifting part of these funds' global investments towards investing in Arab economies may ease the pandemic's repercussions and reduce rampant unemployment in the Arab region," it said.
Such a strategy would also "limit the exposure of these funds to the volatility of international financial markets".
ESCWA urged Arab central banks to "continue providing adequate liquidity to the financial system at any cost during the relief period and during recovery".
For small- and medium-sized businesses, loan restructuring was essential to head off default risks.
