Middle East Economy: Strong Despite Oil Reductions and Instability | Kanebridge News
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Middle East Economy: Strong Despite Oil Reductions and Instability

Amid oil cutbacks and geopolitical tensions, the Middle East’s economy stays resilient, driven by strong non-oil sector growth in the UAE and Saudi Arabia.

Tue, Apr 9, 2024 4:31pmGrey Clock 3 min

Despite facing setbacks from oil production cuts and ongoing geopolitical conflicts, the Middle East’s economy demonstrates resilience, particularly due to significant growth in the non-oil sectors of the United Arab Emirates (UAE) and Saudi Arabia. Economists point to a robust performance in these sectors as a key factor in maintaining regional economic stability.

According to the “Middle East Economy Watch” report by PwC, the strength of the Middle East economy can largely be attributed to the solid growth in the non-oil GDP of Saudi Arabia and the UAE, alongside positive Purchasing Manager Indices (PMI) in these countries. These indicators suggest continued expansion in the early parts of 2024, signaling a robust economic trajectory.

Milestones in Economic Diversification

The UAE has marked a groundbreaking achievement in its economic diversification efforts, with its non-oil sector now comprising 73% of the nation’s total GDP—a historic first for the country. Abdullah bin Touq Al Marri, the Minister of Economy, highlighted this milestone as a testament to the global private sector and investors’ trust in the UAE’s investment climate. He further projected that the economy of the Arab world’s second-largest nation is set to expand by as much as 5.0% in 2024.

Saudi Arabia, as the world’s leading oil exporter, is actively reshaping its economy through the Vision 2030 diversification agenda. Despite a contraction last year due to oil output cuts, the kingdom’s economy is forecasted to grow, thanks to initiatives aimed at reducing oil dependency and bolstering non-oil sectors like technology and tourism.

The Role of Green Finance in Regional Development

Stephen Anderson, partner, Middle East Strategy leader at PwC Middle East mentioned that the region’s focus on sustainability and economic diversification has led to a surge in green finance, enhancing its attractiveness to foreign investors.

The report also highlighted that the success of events like COP28 and the introduction of green finance frameworks have further accelerated this trend, doubling the issuance of green bonds and sukuk in the Middle East in 2023.

With countries like Oman and Qatar introducing sustainable finance frameworks and green bond initiatives, the Middle East continues to build momentum in green financing. This shift not only supports economic diversification and job creation but also draws significant Foreign Direct Investment (FDI).

Navigating Oil Cuts and Sector Growth

Production reductions in the oil sector have been prolonged, yet the non-oil industries continue to thrive: OPEC+ nations have consented to carry forward the cuts in oil production into the year’s second quarter, acknowledging the decelerated demand growth for oil as well as the potential for heightened supply from countries outside the OPEC+ alliance. These continued cuts suggest a probable contraction in the oil sector for 2024 relative to the previous year.

Meanwhile, Saudi Arabia has decided to temporarily pause its ambition to boost oil production capabilities, considering the current supply and demand scenario. This decision, however, is expected to redirect funds towards investments in alternative energy initiatives, including those in gas and renewable energy sectors.

Qatar’s ambitious plans to expand its liquefied natural gas (LNG) production capacity and the exploration of alternative trade routes highlight the region’s strategic adaptations to global energy and trade dynamics. These developments indicate a broader shift towards more sustainable and diversified economic practices.

According to PwC economists, despite oil market fluctuations and geopolitical concerns, the Middle East’s economy is poised for growth, driven by robust non-oil sectors, significant strides in economic diversification, and a growing emphasis on sustainable finance.



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AACCI’s Strategic Vision for Enhancing Australia-Arab Trade Relations

The Australian Arab Chamber of Commerce & Industry (AACCI) is fostering robust trade relations between Australia and Arab countries.

Mon, May 20, 2024 5 min

In an era where global trade and international relationships are more crucial than ever, the Australia Arab Chamber of Commerce & Industry (AACCI) serves as a bridge, for cooperation and growth between Australia and the Arab nations. Led by its Chairman, Mr. Mohamed Hage, the AACCI has taken on projects aimed at strengthening relationships and fostering development across borders.

This exclusive interview explores the initiatives implemented by the AACCI to expand its presence and influence in the region including the significant establishment of a new operational hub in Dubai. We also delve into how the Chamber embraces education through training and research, its participation in major international exhibitions, and its active support for both large corporations and small businesses.

Looking towards tomorrow, Mr. Mohamed shares his vision for broadening AACCI’s reach emphasizing the importance of the on-ground operations and cultural understanding in building business connections.

-Could you elaborate on the Australia Arab Chamber of Commerce & Industry, including its objectives and main areas of focus?

The Australia Arab Chamber of Commerce & Industry (AACCI) plays a fundamental role, in promoting business partnerships and trade between Australia and the 22 Arab countries. As a member of the Union of Arab Chambers affiliated with the Arab League, AACCI focuses on strengthening trade and investment ties, across these countries.

To nurture these connections effectively AACCI has outlined four objectives: facilitating trade and investment activities, certifying documents, educating stakeholders, and offering marketing assistance.

Our initiatives are designed not only to empower trade and investment endeavors but to also ensure engagement with specific sectors that drive these activities. With an understanding of the characteristics, strengths and preferences of each country, AACCI prides itself on its specialized knowledge customized to suit the distinct business environments of these nations.

– As the AACCI approaches its 50th anniversary, what have been some of the key milestones and achievements?

I believe one of AACCI’s accomplishments is the opportunities it has opened up for numerous Australian companies to access markets, in the region. Moreover, the strong bilateral trade relationship that has developed between Australia and the 22 Arab nations over the five decades has led to trade transactions amounting to billions of dollars.

This extensive trade covers industries such as food and beverages, luxury hotels and many more services. Each successive generation, within AACCI has built upon the foundation laid by its predecessors enriching their knowledge base and expanding their range of services.

– How does the AACCI leverage its diverse leadership team to enhance trade and investment opportunities between Australia and the Arab region?

Since taking on the role of chairman, my main focus has been on expanding our presence in the region. This led to the idea of opening an office in Dubai, which symbolizes our dedication to deepening our engagement in that area. We have successfully secured the license to open our first office in Dubai after 50 years, which will serve as a gateway to the GCC and North Africa.

I strongly believe that building two-way trade and investment ties requires more than a degree of business connectivity; it demands having local representatives present in each region. With trends emphasizing strategies the value of face-to-face engagements cannot be overstated.

Setting up offices in the region is essential for the Chamber to truly serve as a link and support system for business activities. Ultimately this expansion will bring benefits to our members and partners by providing them with access, to dynamic markets and diverse prospects.

– Can you discuss the significance of AACCI’s role in cultural and business exchanges between the two regions?

The importance of understanding cultures in our operations cannot be overstated. To address this, we have included a training platform within the Chamber to strengthen our cultural awareness initiatives. This new program offers our members access to modules on our website focusing on global business practices.

Furthermore, we have set up a Center of Excellence specifically dedicated to researching areas like food security and cultural awareness. These research endeavors are essential for promoting knowledge between the two regions.

By combining the resources of the Center of Excellence, our training resources, and the forthcoming local office in Dubai, we’re providing cultural awareness not only in the region but also in Australia. This approach ensures that our members are well equipped and knowledgeable boosting their effectiveness and involvement, in markets.

– What is the objective of your on-ground presence at conferences and events?

Participating in conferences and on ground events is very important for increasing awareness in industries like construction where knowledge of opportunities in the Arab world may not be widespread. When we see projects such as NEOM or notice the construction boom happening in the region it becomes important for organizations like the Chamber of Commerce to highlight these prospects. By taking part in large scale expos such as the Sydney Build Expo we position ourselves at the forefront of these advancements.

Our presence at these events enables interaction giving entrepreneurs a chance to visit our booth engage in discussions and learn more about the region in an approachable and personalized manner. This plays a role in simplifying the process and making opportunities concrete.

– With such a diverse membership base, how does AACCI tailor its services to meet the needs of both large corporations and small startups?

When it comes to discussing business it’s important to grasp how influence and vision come into play. Businesses looking to expand are often motivated by a desire to achieve something whether they are big companies or small enterprises. Small businesses typically aim to raise their brands profile while larger corporations seek recognition and market dominance.

Standing out in this area can be tough mainly because the key driving force is the passion to showcase the brand and products on a platform. This determination serves as a motivator for entrepreneurs.

At the Chamber we make a point of recognizing the needs of both big and small players by understanding each members individual situation. We ensure that every member is well informed about the opportunities and risks that come with expanding. For small businesses, this means being aware of the financial demands, while large businesses are advised on the necessity of both financial and emotional resilience.

– How does AACCI plan to expand or evolve its services in the coming years to further support its members?

The importance of having resources on the ground cannot be emphasized enough. Having local staff is key to establishing connections with the communities we serve. Without a presence in the area staying updated on events and activities becomes quite challenging.

This is why, as I’ve mentioned before, we have established an office in Dubai, staffed with personnel dedicated to supporting our members. This local office will help us effectively bridge the gap between Australia and the Arab world. And our members will benefit from insights and assistance from someone who truly knows the landscape.

In Australia we have equipped offices throughout the country staffed by individuals who play a significant role in our operations. This strong domestic network complements our efforts ensuring that we provide support to our members both locally and globally. This strategic approach is crucial, for nurturing business relationships and fostering continental understanding.

 

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