Economic issues dominate concerns for business executives all over the world, says WEF. Reuters
Economic issues dominate concerns for business executives all over the world, says WEF. Reuters
Economic issues dominate concerns for business executives all over the world, says WEF. Reuters
Economic issues dominate concerns for business executives all over the world, says WEF. Reuters

Energy prices and fiscal woes top Mena business risk worries in 2019


Alkesh Sharma
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Energy price risks dominate concerns for businesses in the Middle East and North Africa due to persistent instability in the cost of oil and production, according to a World Economic Forum report released on Tuesday.

This is the second year in succession that energy prices were cited as the main concern among respondents to the forum's Regional Risks for Doing Business 2019 – a global survey of 12,897 executives from 133 economies.

“The end of 2018 and beginning of 2019 saw immense volatility in this sector… with the price of crude oil dropping by approximately 40 per cent in the fourth quarter and then rising sharply early this year,” the report said.

“Despite plans in many [Arabian] Gulf countries to diversify their economies, hydrocarbon and government activities [which heavily rely on oil revenues] remain the major components of gross domestic product,” WEF said.

Ongoing global trade tensions are also putting downward pressure on energy prices markets, with the International Monetary Fund forecasting oil prices to remain lower for the next several years. The issue was cited as the greatest risk by respondents from Bahrain, which is the country in the region requiring the second-highest oil price to balance its budget, after Libya.

Fiscal crisis, and unemployment or underemployment were named as the second and third-biggest risks regionally. The same three also featured among the top five global economic concerns.

Public debt has increased sharply in the region since the global financial crisis, most notably in oil-exporting countries. The report said debt among oil exporters increased to 33 per cent of GDP, from 13 per cent a decade ago. Among oil-importing countries, "debt has gone from 64 per cent to 85 per cent of GDP" over the same period.

Many Arab states are also tackling high levels of youth unemployment, which stands at 47 per cent in Oman, 45 per cent in Libya, 35 per cent in Tunisia, 35 per cent in Egypt and 33 per cent in Jordan, according to the WEF report.

"In the coming five years, the situation will grow more challenging as an estimated 27 million young people will enter the labour market," the study said.

Other prominent economic concerns cited among global respondents include cyber attacks and the failure of national governance. Cyber attacks were mentioned as the most significant worry by executives in both Europe and North America,

"Cyber threats remain a major risk due to their rapid evolution and increasingly disruptive potential,” said Emilio Granados-Franco, head of global risks at the World Economic Forum.

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