Mena economies, including Egypt, Morocco and Tunisia, as well as the countries in the Levant region are expected to be affected by reduced tourism revenue amid the Israel-Gaza conflict, experts have said.
However, GCC economies will continue to grow amid higher spending by regional governments.
James Reeve, chief economist at Jadwa Investment, told The National on the sidelines of the AIM summit in Dubai on Monday: “Next year would be OK growth-wise [for GCC economies] but not for the Levant … they are going to suffer.
"Then we have a slowdown in tourism for Egypt and potentially Morocco, Tunisia and Saudi Arabia.”
The Israel-Gaza war, which has become a major humanitarian crisis, has created further uncertainty for a global economy that is feeling the effects of stubborn inflation and high borrowing costs.
Last week, the International Monetary Fund voiced concern about the conflict and the impact it could have on regional economies.
“We are concerned first and foremost about the epicentre of the war, the tragic loss of lives, but also the destruction and the reduction of economic activity,” the fund's managing director Kristalina Georgieva told the Future Investment Initiative in Riyadh.
The “chains of the impact” are already visible in neighbouring countries such as Egypt, Lebanon and Jordan, Ms Georgieva said, adding that the uncertainty could “kill” tourist revenue inflow.
“Investors are going to be shy to go to that place, [while the] cost of insurance, if you want to move goods, [will] go up,” she said.
For Saudi Arabia, the Arab world’s largest economy, the loss of tourism revenue due to the conflict “doesn’t cause a material problem but Egypt is going to have a problem", Mr Reeve said.
Home to the Giza pyramids and other attractions, tourism is a key pillar of Egypt’s economy.
The sector's revenue hit $13.6 billion for the fiscal year 2022-2023, up nearly 27 per cent annually, local media reported this month, citing official data.
Strong public-sector investment by the Public Investment Fund will support Saudi Arabia's economy, Mr Reeve said.
The PIF, the kingdom’s sovereign wealth fund, is boosting spending to develop new projects such as the $500 billion Neom.
Saudi Arabia's economy expanded by 1.2 per cent in the second quarter of this year, a slightly faster pace of growth than the initial estimates, driven by a sharp expansion in the non-oil sector, according to the General Authority for Statistics.
Gross domestic product at current prices was 970 billion Saudi riyals ($258.66 billion) in the three months to the end of June, it said.
The UAE, the Arab world's second-largest economy, will also continue to grow, Mr Reeve added.
“There is probably enough going on in the UAE, in terms of government spending, to keep things bubbling on.”
The UAE economy expanded by 3.7 per cent annually in the first half of the year, driven by strong non-oil sector growth, Abdulla bin Touq, Minister of Economy, told the AIM summit on Monday.
“People clearly see this region [the GCC] as a place of growth, as a place of safety and security,” Gary Dugan, chief investment officer of Dalma Capital, said at the event.
“That’s not broken as yet but if this [Israel-Gaza war] continues for some time, then the whole story loses momentum and you are looking at much more modest growth.”
He also said the global economy would “struggle” next year and record slower growth than in 2023.
“We continue to live in a time of volatility and the risk is definitely increasing,” Anne Walsh, managing partner and chief investment officer at Guggenheim Partners Investment Management, said during a panel discussion at the AIM summit.
“We have geopolitical risks ... more inflation, deglobalisation, a monetary tightening era, all of these dragging down activity ... 2024 will be another year like 2023, except [growth] will be slower," she said.
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
PROFILE OF CURE.FIT
Started: July 2016
Founders: Mukesh Bansal and Ankit Nagori
Based: Bangalore, India
Sector: Health & wellness
Size: 500 employees
Investment: $250 million
Investors: Accel, Oaktree Capital (US); Chiratae Ventures, Epiq Capital, Innoven Capital, Kalaari Capital, Kotak Mahindra Bank, Piramal Group’s Anand Piramal, Pratithi Investment Trust, Ratan Tata (India); and Unilever Ventures (Unilever’s global venture capital arm)
The years Ramadan fell in May
SUNDAY'S ABU DHABI T10 MATCHES
Northern Warriors v Team Abu Dhabi, 3.30pm
Bangla Tigers v Karnataka Tuskers, 5.45pm
Qalandars v Maratha Arabians, 8pm
Three ways to limit your social media use
Clinical psychologist, Dr Saliha Afridi at The Lighthouse Arabia suggests three easy things you can do every day to cut back on the time you spend online.
1. Put the social media app in a folder on the second or third screen of your phone so it has to remain a conscious decision to open, rather than something your fingers gravitate towards without consideration.
2. Schedule a time to use social media instead of consistently throughout the day. I recommend setting aside certain times of the day or week when you upload pictures or share information.
3. Take a mental snapshot rather than a photo on your phone. Instead of sharing it with your social world, try to absorb the moment, connect with your feeling, experience the moment with all five of your senses. You will have a memory of that moment more vividly and for far longer than if you take a picture of it.
The specs
Price, base / as tested Dh960,000
Engine 3.9L twin-turbo V8
Transmission Seven-speed dual-clutch automatic
Power 661hp @8,000rpm
Torque 760Nm @ 3,000rpm
Fuel economy, combined 11.4L / 100k
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
World Test Championship table
1 India 71 per cent
2 New Zealand 70 per cent
3 Australia 69.2 per cent
4 England 64.1 per cent
5 Pakistan 43.3 per cent
6 West Indies 33.3 per cent
7 South Africa 30 per cent
8 Sri Lanka 16.7 per cent
9 Bangladesh 0
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
THE BIO: Mohammed Ashiq Ali
Proudest achievement: “I came to a new country and started this shop”
Favourite TV programme: the news
Favourite place in Dubai: Al Fahidi. “They started the metro in 2009 and I didn’t take it yet.”
Family: six sons in Dubai and a daughter in Faisalabad
First Person
Richard Flanagan
Chatto & Windus
Tightening the screw on rogue recruiters
The UAE overhauled the procedure to recruit housemaids and domestic workers with a law in 2017 to protect low-income labour from being exploited.
Only recruitment companies authorised by the government are permitted as part of Tadbeer, a network of labour ministry-regulated centres.
A contract must be drawn up for domestic workers, the wages and job offer clearly stating the nature of work.
The contract stating the wages, work entailed and accommodation must be sent to the employee in their home country before they depart for the UAE.
The contract will be signed by the employer and employee when the domestic worker arrives in the UAE.
Only recruitment agencies registered with the ministry can undertake recruitment and employment applications for domestic workers.
Penalties for illegal recruitment in the UAE include fines of up to Dh100,000 and imprisonment
But agents not authorised by the government sidestep the law by illegally getting women into the country on visit visas.
The specs: Lamborghini Aventador SVJ
Price, base: Dh1,731,672
Engine: 6.5-litre V12
Gearbox: Seven-speed automatic
Power: 770hp @ 8,500rpm
Torque: 720Nm @ 6,750rpm
Fuel economy: 19.6L / 100km
UAE currency: the story behind the money in your pockets
Tips for job-seekers
- Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
- Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.
David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
SCHEDULE
Thursday, December 6
08.00-15.00 Technical scrutineering
15.00-17.00 Extra free practice
Friday, December 7
09.10-09.30 F4 free practice
09.40-10.00 F4 time trials
10.15-11.15 F1 free practice
14.00 F4 race 1
15.30 BRM F1 qualifying
Saturday, December 8
09.10-09.30 F4 free practice
09.40-10.00 F4 time trials
10.15-11.15 F1 free practice
14.00 F4 race 2
15.30 Grand Prix of Abu Dhabi
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
