Saudi Arabia is taking the right steps to unlock its growth potential

In the choppy economic waters of the pandemic recovery, nations around the world face a tide of challenges to achieving sustained, positive growth – particularly the headwinds caused by geopolitical ruptures and an uncertain global economic future. However, GCC states are well placed to ride this wave of uncertainty. The overall success of their Covid-19 responses, coupled with the strength and dynamism of their large-scale transformation projects and diversification programmes, have ensured that they have maintained a level of security and stability within the region. Perhaps most notably, Saudi Arabia’s efforts to transform its business landscape and position itself as a global business leader have set the nation on a path to becoming the world’s fastest-growing major economy in 2022. The momentum behind the kingdom is clear to see for all. The International Monetary Fund has forecast gross domestic product to expand by 7.6 per cent for 2022, the kingdom’s highest in more than a decade, with 3.7 per cent growth forecast for 2023 – the year that, according to several economic indicators, the going will get tough for many developed economies. Given its robust economic outlook, Saudi Arabia has unsurprisingly held the attention of investors from various markets. A large part of this growth is attributed to close supervision by the country’s central bank – Sama – which has strengthened the financial sector and reduced systemic risks through several smart monetary policy moves. Plans are also under way for even tighter financial sector regulation, which will help limit risk factors in the future as well. Also, we cannot discount the measures taken by Saudi Arabia’s sovereign wealth fund – the Public Investment Fund – and its focus on accelerating private sector growth. Later this month, it will host the sixth edition of the Future Investment Initiative – or FII, an annual event run by the FII Institute that convenes regional and global experts to unlock and spur the next phase of business expansion and leadership in the region. The FII’s theme this year is "Investing in Humanity: Enabling a New Global Order" and it will address a series of pertinent challenges, solutions, trends and how to best approach them in a world at the helm of a meta-industrial revolution. Some notable subjects being addressed are supply-chain shocks, super apps, AI, sustainability and using tech for equity. This platform is proof of Saudi Arabia’s commitment to global challenges and forward-thinking approach. It will not only continue to keep the nation in the global spotlight but also give a boost to the region, allowing space for further engagement and growth. As far as broader regional goals are concerned, the FII’s initiatives will also help attract foreign direct investment, an important and impactful path towards the next phase of regional economic development. The GCC countries have historically had access to internal capital so that there has not been a pressing need to prioritise FDI, however there is truly no better time than now to invite foreign investors into the region, show them how far our nations have come while supporting their goals and also addressing long-term national visions. The entire region has capacity to grow FDI inflows in coming years. It is also well-placed geographically in addition to offering a promising and secure socio-economic environment that will draw in investments from outside players. Among the many benefits of increased FDI inflows that the Gulf countries can stand to benefit are higher employment rates, greater resources, increased local competition and a boost in cross-border activity. The GCC nations are uniquely placed in the global business arena at this stage and factors such as stability, security and the capacity to respond to crises efficiently have not gone unnoticed by potential global investors. This is our time to shine but we must channel our best resources to instil further confidence in investors and establish our region as a lucrative and promising prospect for potential investors. To start with, there is room for improvement as far as business infrastructures and the regulatory environments are concerned. Saudi Arabia and the UAE have made significant progress in ease of setting up business, and serve as excellent benchmarks for other nations that want to foster an environment that supports entrepreneurship. We must ask ourselves how we can facilitate the most seamless market entry for global players and offer them incentives including packages, synergetic partnerships with local players and access to local resources that may not be as readily available in other markets. Nations in the region can also partner with one another in order to secure regional investment deals with foreign organisations and present a variety of opportunities that will attract international players in the region. An important factor in attracting FDI is an excellent talent pool. While the GCC is home to a motivated and educated workforce, it will help to promote a culture of continuous upskilling so that our workforce is ahead of the game and ready to support new players in the market. Gulf nations must also continue to brainstorm ideas to grow non-oil sectors and approach foreign investors in the myriad industries in the regions that offer enormous potential for growth. These include tourism, logistics, manufacturing, research and development, education and health care. The whole world is on a path to recovery after a long period of uncertainty, but there is no better time than now to capitalise on our strengths and channel our resources towards a more prosperous and secure future. Investors, especially those in the US and Europe, have taken notice of not only the economic progress of GCC countries but of their excellent governance and successful patterns in implementing security and societal progress. The FII is leading this space and we must build on its efforts so that the world can get a truer picture of our region’s talent, commitment and capabilities. We must strike while the iron is hot. Attracting foreign players and increasing FDI inflows in the region will be an excellent path to recharging economic activity, addressing our long-term growth goals and establishing the region as a sure choice in the eyes of investors from various markets across the globe. An important lesson that has come from shared experience these past years is that we must stay informed of global trends while also having the tools to mitigate unexpected crises. This can be best done through collaboration, and it is indeed inspiring to see our region engage with experts and form partnerships that will support us all in the future.