Potential rating downgrades
However, with regard to sovereign rating downgrades in the pipeline due to the coronavirus, Gill pointed to Middle Eastern economies instead of China.
If the outbreak continues beyond March, the loss of oil demand could really affect prices, which are a “major budgetary parameter” for Gulf countries, he said, noting that the governments are already spending beyond their means.
“If you exclude the investment proceeds from the sovereign wealth funds, every single Gulf economy is running pretty substantial underlying fiscal deficits,” he added.
“You have pretty high breakeven oil prices,” he said, singling out Oman and Bahrain. “They do stand out.”
S&P Global Ratings also wrote in a report that Oman has high export exposure to China at 21.7% of its GDP.
However, Bahrain is “working very hard” to diversify and find non-oil revenues, he said. “But they are where they are in terms of regional exposures, and the key export of this part of the world is clearly crude oil.”
– CNBC’s Sam Meredith contributed to this report.