Governments in the Gulf Cooperation Council (GCC) are maintaining capital investment spending to support economic activity, despite rising fiscal pressures from falling oil prices, a Standard & Poor's Ratings Services report said.

“However, should oil prices fall much below our current expectations and government balances weaken further as a result, we expect GCC governments will increasingly cut back on investment expenditure,” the ratings agency said in the report titled "Gulf Governments Protect Investment Spending To Support Growth."

"Even though we forecast GCC economic growth will slow and fiscal deficits will emerge following the more than 50 per cent drop in oil prices since June 2014, we expect governments will keep capital investment relatively high as a share of total government spending in an attempt to buoy economic growth," said Standard & Poor's credit analyst Trevor Cullinan.

"We believe GCC governments may also look to domestic and international capital markets to diversify their funding sources, support economic growth, build debt capital markets, and slow the depletion of their asset positions," said Cullinan.

Non-government capital spending is weakening, particularly that of oil and gas exploration companies. The value of contracts in the Middle East has fallen to $83 billion in the year to August 2015, a 16 per cent decline on the same period of 2014, the report said. – TradeArabia News Service