This week, a senior delegation from Bahrain is in the UK, aiming to deepen one of our longest-standing and most important strategic partnerships.
During our visit we have had the opportunity to meet leaders across the public and private sector and the message that keeps coming across loud and clear in every conversation we have is that people in London recognise that the GCC is the place to be.
In many ways this should come as no surprise. At a time when the outlook for the global economy has been uncertain at best, the Gulf has been a rare global growth bright spot.
Last year, the GCC economies collectively grew by 7.3 per cent, to a combined total of about $2 trillion. Bahrain’s GDP, over the last two decades, has been increasing at an annual average rate of 8 per cent, while the world grew at 5.5 per cent.
Whether it is companies looking to raise capital or investors seeking a market to deploy it, the region is a highly attractive prospect.
But what has also been clear in our conversations is that investors are increasingly recognising that this is not just a short-term story driven by high oil and gas prices. They recognise that, thanks to the rapid pace of economic reform and diversification in the region, there is a fundamental long-term transformation taking place.
In Bahrain, the financial services sector, for example, is now the largest contributor to the economy, representing 17.5 per cent of real GDP.
This transformation stands to create exciting opportunities across a range of industries, underpinned by our competitive advantages of location, skilled labour, young workforces and low taxation.
The scale of this opportunity is underlined by the fact the World Bank forecasts our economy will grow to exceed $6 trillion by 2050.
Because of this, the GCC has a once-in-a-generation opportunity in the global spotlight, one we should seize with both hands.
To take the UK as an example, its post-Brexit focus is on strengthening its global trade and investment ties, something we saw in the Bahrain-UK Strategic Investment Partnership signed this week in the presence of our respective Prime Ministers, which paves the way for more than £1 billion in Bahrain-sourced investments into the UK.
The UK-GCC Free Trade Agreement negotiations provide an excellent opportunity to deepen our ties with one of the world’s leading economies and a committed partner of the region. We must do everything we can to work together to make the most of this opportunity.
These opportunities expand well beyond the UK. In a more fragmented global economy, countries are looking for reliable partners and the GCC is exceptionally well-placed to fulfil this role.
But we can only make the most of these opportunities if we work together. And a time when the eyes of the world have turned to the GCC is the perfect opportunity for us to find ways to integrate more closely.
Currently, intra-GCC exports account for only about 12 per cent of our total exports. In Asean (Association of South-east Asian Nations), that figure is more than 20 per cent and in the EU it is about 40 per cent.
Clearly, some of this difference is driven by the similarity of our export profiles and the high share of oil and gas in them. However, as our economies become increasingly diversified there is an opportunity for us to use this transformation to deepen regional economic integration.
This has two major advantages. First, it will create opportunities for our own businesses. The easier it is for them to sell into a $2 trillion regional market rather than simply the domestic market, the quicker they will be able to expand.
A greater focus on exports should also help boost innovation and efficiency, which in turn will position GCC companies to compete on the global stage.
Second, it will make the region more attractive to international investors. In any region, there will always be competition between countries to attract FDI (foreign direct investment) And we welcome competition, it’s what drives standards and innovation.
But the real prize available for the GCC is in growing the overall level of investment in the region.
Currently, total FDI inflows to the region are about $45 billion annually, not an insignificant number and about the global average as a share of our GDP. But in 2021 the GCC accounted for less than 3 per cent of total global FDI.
As one of the world’s most exciting markets, we believe we have the potential to account for a much greater share of global investment.
Each of the individual markets in the Gulf is an attractive destination in itself but when they are combined the opportunity becomes unmissable.
This is a very exciting moment for the GCC and it is only the beginning. The world’s attention is now on the region and we must work together to seize the opportunity.
Khalid Humaidan is chief executive of Bahrain Economic Development Board
