GCC country risk analysis

Abstract

Given the increasingly global nature of investment portfolios, understanding country risk is very important for investors. Country risk analysis (CRA) has received extensive interest from researchers, international institutions, individual investors, and policymakers. This growing body of literature did not show enough attention to study country risk for the Gulf Cooperation Council (GCC) countries. As a result, and for a long period of time, international players have dealt with GCC countries as one-type economy (oil and gas) with the same economic, financial, and even political trends. Often GCC country risk was analyzed through the Kingdom of Saudi Arabia as representative for GCC. This neglected efforts to explore the source of GCC country composite risk (CR) and its subcomponents of economic risk (ER), financial risk (FR), and political risk (PR) discouraged international capital to be allocated in GCC. Moreover, the unclear indications of GCC country risk stimulate domestic capital to be allocated outside GCC.