Decision makers can seize on "plenty of opportunities" in the Middle East and North Africa that could help to minimise the impact of the Covid-19 pandemic on the region's economies and steer them back to growth, a panel of experts said.
Most countries in the region have done well in protecting lives, but will now need to shift focus to protect livelihoods, economists and policymakers said during a virtual panel discussion on Thursday.
Getting the balance right between opening up economies and mitigating the risk of further outbreaks remains the top priority. However, steps such as labour market reforms and trade barrier removals within the Arab world can stimulate private sector job creation to help speed up the recovery, they said.
“There are plenty of opportunities that are waiting for decision-makers to seize them. I don’t think we are lacking ideas and what is needed today is the resolve to put various stakeholders around the same table,” Jihad Azour, director of the IMF's Middle East and Central Asia department, said.
“It is important to seize this moment and move in the right direction.”
The webinar, arranged by the IMF, Carnegie Centre and the Dubai International Financial Centre, was moderated by Mina Al-Oraibi, the Editor-in-Chief of The National.
Dame Minouche Shafik, a director at the London School of Economics, Marwan Muasher, vice president at the Carnegie Endowment for International Peace, and Monica Malik, chief economist at Abu Dhabi Commercial Bank, also took part in the virtual discussion.
Economies in the Middle East North Africa and Central Asia region are grappling with the double whammy of the Covid-19 pandemic and volatility in oil prices. The IMF estimates gross domestic product in the Middle East and Central Asia will shrink 4.7 per cent this year. This projection is 2 percentage points lower than the fund's earlier forecast in April.
This is in line with the revised outlook for the world economy, which the Washington-based lender projects will shrink 4.9 per cent in 2020 before a sluggish recovery in 2021. The IMF estimates a cumulative loss of more than $12 trillion (Dh44tn) to the global economy, which is facing the deepest recession since the Great Depression.
Central banks and governments around the world have pumped an additional $11tn (Dh40.4tn) into their economies to limit the economic damage caused by the pandemic.
Most economies in the region have begun reopening after restrictions on movement were put in place to stem the spread of the pandemic. However, the infection rate is still on the rise in many parts of the world, including some countries in the Mena region.
“I would say keep an eye on the pandemic because the risk is not over,” Mr Azour said. “With the reopening there are increased numbers of [Covid-19] cases, therefore, we should not relax. I think this [protecting lives] is still the priority number one.”
The virus has infected more than 13.5 million people worldwide and killed more than 584,000, according to Johns Hopkins University, which is tracking the outbreak.
The IMF expects the contraction in the economies of the Arab world to be deeper this year than those in the Caucasus and Central Asia region. Economies of oil-exporting nations are facing greater challenges.
Ms Malik of ADCB said the path to recovery will be long and uneven, as the current crisis has hit both oil and non-oil sectors of regional economies.
The availability of a vaccine or improved control of the pandemic will be key to the recovery. However, governments will also have to come up with plans to broaden and deepen their economies, she added.
“The sectors that have got economies across the GCC and the Mena region where they are now are not going to provide the same growth and drive going forward,” Ms Malik said.
“With fiscal pressures, bringing in foreign investment is going to be very, very important … creating a framework for that is going to be [critical].”
"There are plenty of opportunities that are waiting for decision makers to seize them. I don't think we are lacking ideas and what is needed today is resolve and to put various stakeholders around the same table"
Improved integration of economies across the Arab world and the removal of trade barriers would also be mutually beneficial, setting foundations for a sustained growth, Mr Muasher said.
“This region [Mena] needs to be a more integrated economy, whether it is currency union, labour movement or trade among countries,” he said. “This region is not trading with itself … the figure is that 7 per cent of all trade [from the region] happens in between Arab countries and the rest of the trade happens outside.”
Mr Azour agreed, saying Arab nations should try to find common areas of interest. Agriculture and food security, he said, are issues of great importance given the current crisis, and Arab countries can find common ground to work together on these.
Unemployment and labour market reforms are among the impediments to economic growth in the region. However, the current crisis has provided an opportunity to address these, Dame Minouche said.
“Crises open up possibilities … at the moment, the region has, in some ways, the worst of all possible worlds in terms of the policy framework around the labour markets,” she said. “Perhaps this shock might will open up the debate on how do we bring more people into the formal labour market, make it more flexible ... but in parallel produce social protection.”
Mr Muasher said citizens of Arab nations should be valued as a labour market resource, and they should have a voice in problem-solving, which is essential to speed up inclusive growth in the region.
“I will say three ‘Is’ - inclusion, inclusion and inclusion,” as not all economic challenges have purely economic solutions, he said.
“There is no magic wand that you can wave and solve economic problems of the region … whether it is [by] the end of 2020 or end of 2025,” Mr Muasher said. “You can only do that if the citizens are convinced that they are part of the solution.”
Company%20profile
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SPEC%20SHEET%3A%20NOTHING%20PHONE%20(2)
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GRAN%20TURISMO
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SPECS
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Another way to earn air miles
In addition to the Emirates and Etihad programmes, there is the Air Miles Middle East card, which offers members the ability to choose any airline, has no black-out dates and no restrictions on seat availability. Air Miles is linked up to HSBC credit cards and can also be earned through retail partners such as Spinneys, Sharaf DG and The Toy Store.
An Emirates Dubai-London round-trip ticket costs 180,000 miles on the Air Miles website. But customers earn these ‘miles’ at a much faster rate than airline miles. Adidas offers two air miles per Dh1 spent. Air Miles has partnerships with websites as well, so booking.com and agoda.com offer three miles per Dh1 spent.
“If you use your HSBC credit card when shopping at our partners, you are able to earn Air Miles twice which will mean you can get that flight reward faster and for less spend,” says Paul Lacey, the managing director for Europe, Middle East and India for Aimia, which owns and operates Air Miles Middle East.
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.”
What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
One in nine do not have enough to eat
Created in 1961, the World Food Programme is pledged to fight hunger worldwide as well as providing emergency food assistance in a crisis.
One of the organisation’s goals is the Zero Hunger Pledge, adopted by the international community in 2015 as one of the 17 Sustainable Goals for Sustainable Development, to end world hunger by 2030.
The WFP, a branch of the United Nations, is funded by voluntary donations from governments, businesses and private donations.
Almost two thirds of its operations currently take place in conflict zones, where it is calculated that people are more than three times likely to suffer from malnutrition than in peaceful countries.
It is currently estimated that one in nine people globally do not have enough to eat.
On any one day, the WFP estimates that it has 5,000 lorries, 20 ships and 70 aircraft on the move.
Outside emergencies, the WFP provides school meals to up to 25 million children in 63 countries, while working with communities to improve nutrition. Where possible, it buys supplies from developing countries to cut down transport cost and boost local economies.
RESULT
Al Hilal 4 Persepolis 0
Khribin (31', 54', 89'), Al Shahrani 40'
Red card: Otayf (Al Hilal, 49')
SHAITTAN
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ANATOMY%20OF%20A%20FALL
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What went into the film
25 visual effects (VFX) studios
2,150 VFX shots in a film with 2,500 shots
1,000 VFX artists
3,000 technicians
10 Concept artists, 25 3D designers
New sound technology, named 4D SRL
UAE currency: the story behind the money in your pockets
Rocketman
Director: Dexter Fletcher
Starring: Taron Egerton, Richard Madden, Jamie Bell
Rating: 3 out of 5 stars
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Wicked: For Good
Director: Jon M Chu
Starring: Ariana Grande, Cynthia Erivo, Jonathan Bailey, Jeff Goldblum, Michelle Yeoh, Ethan Slater
Rating: 4/5
What is blockchain?
Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.
The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.
Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.
However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.
Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.
The Vile
Starring: Bdoor Mohammad, Jasem Alkharraz, Iman Tarik, Sarah Taibah
Director: Majid Al Ansari
Rating: 4/5
STAR%20WARS%20JEDI%3A%20SURVIVOR
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Key recommendations
- Fewer criminals put behind bars and more to serve sentences in the community, with short sentences scrapped and many inmates released earlier.
- Greater use of curfews and exclusion zones to deliver tougher supervision than ever on criminals.
- Explore wider powers for judges to punish offenders by blocking them from attending football matches, banning them from driving or travelling abroad through an expansion of ‘ancillary orders’.
- More Intensive Supervision Courts to tackle the root causes of crime such as alcohol and drug abuse – forcing repeat offenders to take part in tough treatment programmes or face prison.
UAE currency: the story behind the money in your pockets
Mountain%20Boy
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Zainab%20Shaheen%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Naser%20Al%20Messabi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3C%2Fstrong%3E%3A%203%2F5%3C%2Fp%3E%0A
Bundesliga fixtures
Saturday, May 16 (kick-offs UAE time)
Borussia Dortmund v Schalke (4.30pm)
RB Leipzig v Freiburg (4.30pm)
Hoffenheim v Hertha Berlin (4.30pm)
Fortuna Dusseldorf v Paderborn (4.30pm)
Augsburg v Wolfsburg (4.30pm)
Eintracht Frankfurt v Borussia Monchengladbach (7.30pm)
Sunday, May 17
Cologne v Mainz (4.30pm),
Union Berlin v Bayern Munich (7pm)
Monday, May 18
Werder Bremen v Bayer Leverkusen (9.30pm)
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Tonight's Chat on The National
Tonight's Chat is a series of online conversations on The National. The series features a diverse range of celebrities, politicians and business leaders from around the Arab world.
Tonight’s Chat host Ricardo Karam is a renowned author and broadcaster who has previously interviewed Bill Gates, Carlos Ghosn, Andre Agassi and the late Zaha Hadid, among others.
Intellectually curious and thought-provoking, Tonight’s Chat moves the conversation forward.
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