Mena outlook ‘generally positive’ despite risks, including food and energy security
Saudi Arabia’s finance minister said the outlook for the Mena region was “generally positive” but common challenges remained.
Mohammed Al Jadaan said energy security as a result of Covid-19 and the recovery from the pandemic, which has also strained supply chains, were among the risks.
“Food security is also another serious problem, again, fuelled by the geopolitical situation,” Mr Al Jadaan said, during a session titled the “Middle East and North Africa Economic Outlook” at Davos.
However, the Saudi economy is projected to grow by 7.4 per cent this year, he said, driven by higher oil prices. Brent crude is currently above $110 a barrel.
Bahrain’s Minister of Finance and National Economy Sheikh Salman bin Khalifa said “high oil prices have the benefit of reducing funding needs”.
“Strong economic growth towards the end of 2021 has continued, picking up pace through 2022.”
Bahrain is on course to more than triple non-oil revenue by the end of this year, compared to 2018, he said.
“Let us not underestimate the work that has been done on increasing non-oil revenue. And today, the increase in oil prices has masked the amount of effort and the amount of results that have been delivered by that increase.”
Mohammed Alardhi, executive chairman of alternative asset manager Investcorp, said with oil prices where they were, GCC economies were “living the ideal scenario”, especially where inflation was concerned, in which producers could “raise prices, expand volume and not raise costs”.
“We are very optimistic. We are deploying capital in the Gulf and it is a great story,” he said.
Malls operator Majid Al Futtaim’s chief executive Alain Bejjani said the “biggest lost opportunity is that [the] Mena region is not a region”.
“And unless we get to a point where this Mena region becomes a region that we can easily punch [above our weight] where we should be punching, we are going to continue to be on the path,” he said.
“We are launching tomorrow … a report on regional economic integration, and one of the things that you will find is the fact that the Mena region, on average, produces half the GDP [compared to] the average global GDP [per capita].
“So, each one of us individually in the Mena region, we actually produce half what an average person in the world produces, or contributes, which tells you a great story about what we are missing.
“We owe it to our region, we owe it to the almost 600 million people that live from North Africa all the way to Pakistan, to really work together in order to push this region to reach its economic potential.”
However, the UAE and Saudi Arabia are major engines of growth “at their best”, thanks to reforms made in these economies, Mr Bejjani said.
Although the Mena region imports most of its food, inflation will be less of an issue, compared with elsewhere in the world, thanks to central banks and regulators having more tools to deal with it, he said. “I would say [there is a] value-conscious customer because of the inflationary pressures, definitely.”
Mr Al Jadaan said, however, that “it is very critical for international organisations and multilateral development institutions, including the World Bank, to look at this region very carefully and very quickly”.
“There are countries that really, really need support and we are working with the [International Monetary Fund], the World Bank, but using this forum, I would like really everyone to take this very seriously,” the Saudi finance minister said.
Sheikh Salman said “sustainable growth is what we should be delivering”.
“Inflationary pressures have to be managed, but you should not compromise the drive to deliver sustainable growth. Efforts to try to do that, to try to slow down the growth on purpose, the results are in the history books.”
There are countries that really, really need support and we are working with the IMF and the World Bank MOHAMMED AL JADAAN Saudi Arabia’s Minister of Finance