The economic growth momentum in the GCC is set to pick up pace in the next two years as the countries continue with their diversification efforts.
The region is forecast to grow by 1 per cent in 2023 before rebounding to 3.6 per cent and 3.7 per cent in 2024 and 2025, respectively, the World Bank said in a report on Wednesday.
The non-oil sector in the region is projected to grow by 3.9 per cent in 2023 and 3.4 per cent in the medium term “supported by sustained private consumption, strategic fixed investments, and accommodative fiscal policy”, the Washington-based lender said in its economic update for the region.
However, the oil economy is expected to contract by 3.9 per cent amid output cuts by Opec+ member countries and the global economic slowdown caused by tightening monetary policy and geopolitical concerns.
“To maintain this positive trajectory, GCC countries must continue to exercise prudent macroeconomic management, stay committed to structural reforms, and focus on increasing non-oil exports,” said Safaa El-Kogali, the World Bank's country director for the GCC.
“However, it is important to acknowledge the downside risks that persist. The current conflict in the Middle East poses significant risks to the region and the GCC outlook, especially if it extends or involves other regional players. As a result, global oil markets are already witnessing higher volatility.”
The Israel-Gaza conflict, in its seventh week, continues to raise concerns about global economic growth if it is not contained.
More than 14,000 people have been killed in Gaza since the war started on October 7, while diplomatic efforts continue to end the hostilities in the region.
Oil prices rose following the start of the conflict, but fell in the subsequent weeks on rising demand concerns amid the tightening of the monetary policy by the central banks.
The latest World Bank report said the diversification efforts in the GCC region are paying off but more reforms are needed.
“The region has shown notable improvements in the performance of the non-oil sectors despite the downturn in oil production during most of 2023,” said Khaled Alhmoud, senior economist at the World Bank.
“Diversification, and the development of non-oil sectors, has a positive impact on the creation of employment opportunities across sectors and geographic regions within the GCC.”
GCC countries, especially Saudi Arabia and the UAE – the region’s two largest economies – are continuing to focus on diversification of their economies with new projects and initiatives.
The UAE economy is expected to grow 3.4 per cent in 2023 with oil GDP growth projected at 0.7 per cent and non-oil GDP at 4.5 per cent, backed by a strong performance in tourism, real estate, construction, transportation, manufacturing and a surge in capital expenditure, according to the World Bank.
The Emirates' non-oil economy continues to grow amid its diversification push. Business activity in the UAE's non-oil private sector economy hit its highest level in more than four years in October, driven by a sharp rise in new orders and output, latest data shows.
The UAE economy expanded by 3.7 per cent annually in the first half of the year, Minister of Economy Abdulla bin Touq said last month.
Saudi Arabia is building the $500 billion Neom project along the Red Sea coast that is expected to boost the kingdom's tourism and real estate sector. It is also developing new entertainment projects including Qiddiya in Riyadh as it pushes to reduce its reliance on oil and create more jobs as part of the Vision 2030 programme.
The kingdom's non-oil economy grew at its fastest pace in four months in October due to higher client orders and improving economic conditions.
The headline Riyad Bank purchasing managers' index reading climbed to 58.4 in October, up from 57.2 in September, the highest level since June.
Saudi Arabia’s gross domestic product is expected to contract by 0.5 per cent this year before rebounding to 4.1 per cent in 2024, according to the World Bank. The oil sector is expected to contract by 8.4 per cent this year amid production cuts by Opec+, while the non-oil sector is expected to grow at 4.3 per cent.
The World Bank said the Saudi private sector workforce has grown steadily, reaching 2.6 million in early 2023, with women’s participation in the labour market more than doubling in six years, from 17.4 per cent in early 2017 to 36 per cent in the first quarter of 2023.
“This positive development was a result of an effective reform drive, started by the kingdom’s Vision 2030, that made it significantly easier for more women to join the workforce,” the lender said.
Bahrain’s economy, meanwhile, is estimated to grow 2.8 per cent in 2023, while Kuwait, Qatar and Oman are projected to grow 0.8 per cent, 2.8 per cent and 1.4 per cent, respectively, according to the World Bank.
UAE Premiership
Results
Dubai Exiles 24-28 Jebel Ali Dragons
Abu Dhabi Harlequins 43-27 Dubai Hurricanes
Fixture
Friday, March 29, Abu Dhabi Harlequins v Jebel Ali Dragons, The Sevens, Dubai
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.”
On Instagram: @WithHopeUAE
Although social media can be harmful to our mental health, paradoxically, one of the antidotes comes with the many social-media accounts devoted to normalising mental-health struggles. With Hope UAE is one of them.
The group, which has about 3,600 followers, was started three years ago by five Emirati women to address the stigma surrounding the subject. Via Instagram, the group recently began featuring personal accounts by Emiratis. The posts are written under the hashtag #mymindmatters, along with a black-and-white photo of the subject holding the group’s signature red balloon.
“Depression is ugly,” says one of the users, Amani. “It paints everything around me and everything in me.”
Saaed, meanwhile, faces the daunting task of caring for four family members with psychological disorders. “I’ve had no support and no resources here to help me,” he says. “It has been, and still is, a one-man battle against the demons of fractured minds.”
In addition to With Hope UAE’s frank social-media presence, the group holds talks and workshops in Dubai. “Change takes time,” Reem Al Ali, vice chairman and a founding member of With Hope UAE, told The National earlier this year. “It won’t happen overnight, and it will take persistent and passionate people to bring about this change.”
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3ESmartCrowd%0D%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2018%0D%3Cbr%3E%3Cstrong%3EFounder%3A%20%3C%2Fstrong%3ESiddiq%20Farid%20and%20Musfique%20Ahmed%0D%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinTech%20%2F%20PropTech%0D%3Cbr%3E%3Cstrong%3EInitial%20investment%3A%20%3C%2Fstrong%3E%24650%2C000%0D%3Cbr%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%3C%2Fstrong%3E%2035%0D%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3ESeries%20A%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EVarious%20institutional%20investors%20and%20notable%20angel%20investors%20(500%20MENA%2C%20Shurooq%2C%20Mada%2C%20Seedstar%2C%20Tricap)%3C%2Fp%3E%0A
match info
Southampton 2 (Ings 32' & pen 89') Tottenham Hotspur 5 (Son 45', 47', 64', & 73', Kane 82')
Man of the match Son Heung-min (Tottenham)
