Effects of Covid-19 on Economic and the role of Banks to recover from this Pandemic.

Coronavirus or Covid 19 has badly impact almost all over the world. The uncertainty caused by the coronavirus is far-reaching. This coronavirus has negatively affected global economic growth as it not only causes several causalities but also affect financial growth of the countries.

Most of the economists believe that world has facing the economic downturn; however Middle East governments have taken different measures to recover the economy because banking sector has been affected by Covid-19 very badly. The banking sector is the backbone of any economy and for development and growth of economy there should be a strong banking services prevail in the country.

The banks can help economy to recover from that pandemic as Qatari banks helped the economy to recover by issuing the bonds, it’s a better way of attracting the new investors. Both Qatar National Bank (QNB) and CBQ (Central bank of Qatar) issued bonds in April 2021, worth the equivalent of $167.97m and $161.6m.?CBQ also provide additional cash approximately QR 75 billion to private banks for smooth financial services in the country, and offers a postponement of installments for the effected sectors.

Islamic banking in Oman look bright that People of Oman need a growing alternative financing model that should help sharia-compliant banks which can gain greater market share in the recovery phase.

The Saudi Arabian banks adopts new trends in banking like the rise of digital banking and fintech to mitigate the effects of COVID-19. In this way the banking sector witnessed increased credit growth, offer mortgage and small loan lending, and there is a prediction that this trend will remain strong into 2021-2022.

United Arab Emirates is also recovering from the pandemic as CBUAE had started the Targeted Economic Support Scheme (TESS) to avoid restricting credit supply and economic growth. The UAE economy is growing rapidly because TEES program allowed bank to maintain lower capital. The UAE economy is expected to grow by 4.2% in 2022 said by Central bank of UAE.

While Jordan economy has been hit hard by the COVID-19 pandemic and it’s already has low growth, high unemployment and growing debt. The Central Bank of Jordan decided to take precautionary procedures which can be minimized the negative repercussions of the COVID-19 virus on the local economy. The Capital bank of Jordan the financial inclusion fund FMO and European commission started a program that facilitates young entrepreneur to get loan in easy way. The loans will be used for income generating activities.

The COVID-19 also imposes new challenges on the banking sector to become digitalize. Banks must offer services and products without branches this will be a challenge for banks.

Banks can avail this opportunity and offer digital assets to their customers so they can get better services at their home and in this way they can minimize the effect of Covid-19 on global economy.

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References:

1.?????https://oxfordbusinessgroup.com/news/report/2021-12-07/Was Oman's banking sector resilient enough to support economic stability during the pandemic?

2.?????https://www.reuters.com/world/articles/2021-09-22/uae economy to grow 2.1%this year and 4.2% next central-bank says.

3.?????https://ec.europa.eu/international-partnerships/news/2021-06-19/EU External Investment Plan: two new agreements unlock funding for underserved and displaced entrepreneurs.

4.?????https://www.fitchratings.com/research/2021-06-09/Bahrain's Sizable Islamic Banking Sector Has Scope for Growth

5.?????https://www.pwc.com/articles/2021-06-06/ Qatar banking sector emerges from COVID-19 volatility in a strong position

6.?????Congressional Research Service?November 10 2021 “Global Economic effects of COVID-19”