The oil-exporters GCC countries’ increasing trade and investment links with emerging Asian markets increase their economic reliance on global growth and exposure to foreign shocks, Standard & Poor's said in a new report. The ratings agency underscored that trade relations between the Gulf Cooperation Council (GCC) countries and Asia (excluding Japan) have risen sharply at the expense of Europe, the USA and Japan since 2005. This is due to emerging Asian countries' growing demand for hydrocarbon commodities, the GCC’s main export item. On the other hand, growing unconventional energy output and energy efficiency in developed markets are cutting their import needs, S&P noted.

The ratings agency underscored that GCC exports to the EU, the USA and Japan have fallen to less than 30% in 2012 from 51% in 1995. Meanwhile, Asia is currently the GCC's largest export destination, accounting for 57% of total foreign sales, S&P said.

But the situation is not that alarming as S&P noted that despite growing trade ties, the GCC states have been largely unaffected by the recent capital outflows and declining asset values that emerging markets have experienced since the US Federal Reserve signalled it would start tapering.  S&P underscored that GCC countries' fiscal and trade surpluses make them largely immune to foreign capital outflows.

The GCC states, however, will be vulnerable to a potential slowdown of growth in emerging markets, S&P added. A sharp slowdown in major emerging economies and a potential increase of capital outflows, would affect GCC countries mainly through falling oil market prices, according to S&P, noting that this is not its baseline scenario.

The ratings agency expects that GCC countries will introduce fiscal expansion to support their national economies in a scenario of falling oil prices. Bahrain, however, would be the most vulnerable GCC country in such a scenario as it is the only country already running a fiscal deficit.