With 2016 only weeks away, Euler Hermes chief economist, Ludovic Subran shared his advice on where the greatest opportunities will lie for GCC businesses in the new year.
Opportunity #1: Renewable Energy
The current economic situation is an opportunity for GCC countries to press ahead with diversification – not just away from energy, but also within the energy sector itself. Given climatic and meteorological conditions, and the current appetite for policies promoting the green economy, solar energy is high on the list (e.g. Solar GCC Alliance).The UAE plans to invest $35bn in “clean energy” by 2021 and Saudi Arabia plans to spend $100bn on solar projects by 2030.
Opportunity #2: HUB in three directions
The finance belt – GCC economies will also press ahead with expanding their geographic advantages (at the crossroads between Europe, Asia and Africa) to promote their countries as a regional hub for financial services. In addition to Bahrain (with limited domestic hydrocarbon resources), financial services are important for the UAE and of growing importance for Oman (small scale). Saudi Arabia. Islamic finance has enjoyed dynamic development, with 16% annual growth on average over the last five years.
The transport belt – Dubai has been a maritime hub for many generations but the UAE is now a major air hub. Emirates became the 6th largest global aeronautic company with 3.5% of worldwide market share.
The trade belt – Iran is back in the game and Chinese development towards Europe and Africa positions the GCC as a major crossroad hub.
Opportunity #3: Tourism
The UAE leads tourism development in the region with activity multiplied four-fold over the past 10 years. Qatar’s momentum is growing, with the staging of major events boosting infrastructure projects up to $90bn.
Opportunity #4: Boosting retail sales
GCC could leverage on wealth based in its own domestic markets. In particular, UAE and the Dubai International Airport are already retail centers.
“This is the right time for the GCC countries to make some significant improvements,” concluded Subran. “Its structural business environment needs transparency and less bureaucracy, the private sector needs to be promoted, further trade liberalization is required and aspects of competitiveness need to be addressed. The GCC influence worldwide is based on real estate, financial services and energy, but key for future growth is promoting regional cooperation rather than national competition.”
