TRUMP GIVES REGION A REASON TO HOLD ON TO ITS CONFIDENCE
▶ Survey of UAE and Saudi executives by ‘The National’ predicts sentiment will improve
Amid heightened geopolitical tensions in the region, executives in the UAE and Saudi Arabia have reassessed their investment and business decisions.
But with US president Donald Trump’s commitment to supporting the two Gulf countries, sentiment is expected to improve this year, a survey commissioned by The National revealed.
Eighty-five per cent of respondents in the survey carried out by Borderless Access in the UAE, either strongly agreed or just agreed, that tensions had made them revise their economic outlook for this year and led them to reassess investment and business decisions.
In Saudi Arabia 95 per cent of those that were asked the question strongly agreed, according to the survey.
“The survey results are clearly highlighting the fact how geopolitical tensions builds uncertainty within business sentiments and has a direct impact on economic outlook and investment decisions,” said Dushyant Gupta, the senior vice president at Borderless Access.
Mr Gupta attributed the greater concerns in Saudi Arabia to the country’s proximity to regions of political tensions.
In the UAE, one in six respondents said they were not changing business decisions in spite of the political situation.
The poll comes fourth month into the dispute between Qatar and a number of Middle Eastern countries. The UAE, Saudi Arabia, Bahrain and Egypt broke diplomatic ties with Qatar and cut off their air, sea and land links to the country on June 5 over Doha’s support for “terrorist groups aiming to destabilise the region”. The crisis is the most serious since the GCC’s creation in 1981.
So far economists say the bulk of the economic damage in the region is being done to Qatar as the number of visitors falls and a sell-off in the country’s stock market and drop in demand for Qatari riyals rattles the country’s financial industry.
At the same time, the survey found that businessmen in the UAE and Saudi Arabia are upbeat about the investment outlook this year after Mr Trump’s visit to the region earlier this year.
Ninety-two percent of respondents to the poll in the UAE either strongly agreed or simply agreed that Mr Trump’s commitment to supporting the UAE and Saudi Arabia is positive for the investment outlook this year, while in Saudi Arabia 79 per cent of those polled either strongly agreed or only agreed with the notion.
Mr Trump visited Saudi Arabia in May, signing deals valued at more than US$380 billion (Dh1.4 trillion) which included the supply of US defence equipment and services to Saudi Arabia.
His visit was aimed at putting in place a framework for stroger partnership with traditional US-Arab allies which involves them taking on a greater share of the responsibility for regional security.
Previous US presidents have made attempts to put such a plan in place, but diverging views and threat perceptions, as well as concerns about the US abandoning the region, have always undermined them.
The Trump administration has taken a much harder line on Iran than its predecessor. It has vowed to work with Gulf countries to bolster their ability to deter and contain Iran, which Riyadh considers its greatest security threat and regional rival.
Despite the tensions, economists remain upbeat about an economic recovery in the UAE following several years of tepid growth.
The UAE’s non-oil economy is set to get a boost in the second half of the year from a pick-up in government spending ahead of Expo 2020.
Economists also say that an improvement in the fortunes of the global economy will also aid tourism and real estate. Consumer spending activity, which has been improving, is also set to get a lift in the final quarter of this year as people buy durable goods before the 5 per cent vale added tax levy is introduced on January 1.
Despite the tensions, economists remain upbeat about an economic recovery in the UAE
From left, Egyptian president Abdel Fattah El Sisi, Saudi King Salman, US first lady Melania Trump and president Donald Trump