This year's World Economic Forum is setting the stage for a more sustainable Middle East

At Davos, political and business leaders will ask how they can jump-start equitable development in the region

This year's WEF in Davos, Switzerland will convene a forum called 'Leaders for a Sustainable Mena'. The National
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The Mena region was rarely out of the news during 2022, whether it was Qatar’s hosting of the World Cup and with it the region’s football dreams or the Arab States-China Summit in Riyadh, and the swift spread of anti-government protests in Iran. This pattern looks set to continue into 2023 during which Turkey will celebrate its centenary as a republic, the UAE will host Cop28, and global investors will come knocking at the doors of the region’s sovereign wealth funds if the World Bank’s forecasts about a global recession are correct.

Beyond the eye-catching headlines, it will be a formative year for the region in several other ways. The decisions its political and business leaders make and targets they set about the climate change agenda, the rights of women, and economic reform, will shape Mena – and the world – for decades to come.

For the oil-producing Gulf states, the economic outlook for 2023 is robust, and the activities of Opec will be closely watched. According to the World Bank’s forecasts, GCC economies grew by 6.9 per cent in 2022 while also keeping inflation under control. It is estimated that by 2027 their cumulative oil windfall will be $1.3 trillion in additional revenues. Countries such as Saudi Arabia and Iraq will have the funds not only to offset high food prices – and with this, a domestic cost of living crisis of the sort witnessed elsewhere in the region – but to invest. This offers the perfect opportunity to start making the economic model more sustainable.

To be able to do this, governments in the region must maintain economic discipline, commit to reform, pursue economic diversification – and importantly for investors – display agile, well-communicated decision-making. Deepening integration offers a relatively straightforward policy measure to stimulate and increase the resilience of the region’s economies. Less positively, recent IMF studies have highlighted how the skills deficit in the region stands at about 70 per cent, underlining the need for a skills revolution that reimagines the region’s education systems with a focus on enabling personalised lifelong learning.

With funds and attention on climate change, 2023 should be the year when Gulf states work on strategy with their regional counterparts to chart Mena’s course towards net zero. With the region hosting consecutive Cop summits, the climate change discourse remains with the Middle East, offering the region a rare chance to find a collective voice on this issue. To support this, the Forum is convening a group called Leaders for a Sustainable Mena, which will be tasked with jointly identifying the most efficient routes to decarbonisation and reducing the gap with other regions in terms of corporate sustainability practices.

Preparations are under way to stage this year's World Economic Forum. Bloomberg
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2023 should be the year when Gulf states work on strategy with their regional counterparts to chart Mena’s course towards net zero

This is important because Mena is at serious risk from the effects of the changing climate, in large part because it is warming at twice the global average. It is already prone to hot, dry weather, but this is developing into regular periods of drought. During 2022, the region suffered a series of dust and sand storms, blamed on the increasingly arid conditions. These caused infrastructure damage, affected transport, destroyed crops and increased health problems.

The growing periods of extreme heat will make some areas uninhabitable, placing heightened stress on both crop production – almost 70 per cent of which is rainwater fed – and already scarce water resources. Economically, the outlook is equally dire: according to the IPCC, water-related catastrophes are projected to take 14 per cent off the region’s gross domestic product by 2050 (compared to a global average of 0.5 per cent). The unrest in Iran that the death of Mahsa Amini sparked off, and which followed water-related protests, underscores how the interaction between exclusion and climate change can destabilise societies.

All this makes more than a strong case for climate action that will help Mena’s populations and businesses adapt to the growing climate realities and prepare for future shocks. Pursuing measures now will reduce future adaptation and disaster management costs, with research from the World Economic Forum and PwC suggesting that increasing supply chain resiliency today has the potential to generate $1.7 trillion in net benefits by 2030.

The region is expected to be pivotal in global energy security. Endowed with ample natural resources and with among the lowest unit costs for renewable energy generation, Mena can position itself at the heart of ensuring that the energy transition is sustainable – ultimately supporting planetary health – and just. This is important because soberingly, a recent IEA report suggested that during 2022, the number of people globally without access to electricity increased for the first time to 775 million.

Hearteningly, growing numbers of Mena states are committing to net zero, but more action could be taken and opinion is divided about the climate strategies the region should pursue. Research from the WEF and Bain and Company suggests greening the business model of the top businesses in the region. The region’s 20 largest state-owned enterprises produce the same amount of GHG emissions as Canada. Making their operations sustainable won’t be easy, given how most are at the core of the fossil fuel industry. But their size, influence and innovation potential ensure that their actions resonate disproportionately.

Inclusivity is vital to sustained – and increasingly, sustainable – economic development. The WEF’s Global Gender Gap 2022 report highlighted some positive trends, but the fact remains that at the current rate of change it will take 115 years to achieve gender parity in Mena. An OECD study estimated that the region is losing $575 billion a year due to the legal and social barriers that exist related to women’s access to jobs and careers.

Universally, women suffer disproportionately during times of crisis and upheaval. The spectre of climate change taking hold in Mena will, unless there is swift change, exacerbate gender disparities, leaving women worse off. Given the growing impetus to address climate change, a shift towards a more inclusive and sustainable economy that takes advantage of both genders’ skills sets could constitute a double win for the region.

Last year was a reminder that the world needs as many wins as it can get. Looking to 2023, there are few countries lucky enough to have opportunities, with most facing a difficult year ahead. Parts of Mena will buck this trend and it is incumbent on them to use this to their current and future advantage.

Published: January 13, 2023, 6:00 PM