Mubasher: Moody’s Investors Service on Monday has maintained negative outlook for the GCC’s sovereign ratings in 2018.

The 2018 outlook reflected GCC members’ muted economic growth, geopolitical disputes in the region and structural challenges, according to the international ratings agency's report.

"Although oil prices have risen significantly from their lows in early 2016, most sovereigns in the region will continue to run sizable fiscal deficits and record an increase in their debt burdens over the next 12 to 18 months," Moody's vice president Steffen Dyck said.

The long-existing geopolitical event risks will play a key role in defining sovereign credit quality in 2018, Dyck added.

Three of the six GCC sovereigns already hold negative rating outlooks, while the rest have stable outlooks, and they are expected to have lower rating in 2018, the report added.

The GCC’s gross domestic product (GDP) would rise slightly to 2% in the current year, Moody’s forecast.

“If oil prices stabilise at their current levels, the pace of proactive fiscal consolidation could be slowed because government revenues will be bolstered,” the report stated.

In 2015 and 2016, the hike of oil prices and fiscal consolidation contributed to slashing the fiscal deficits of the GCC from their peaks.

“On an On an aggregate basis the GCC will exhibit an average fiscal deficit of 5% of regional GDP this year and next. This will contribute to a rise in debt levels and a reduction in fiscal reserves for most sovereigns in 2018,” according to Moody’s.