Sustained economic recovery in the Middle East (international perspective)
The World Economic Outlook report recently released by the International Monetary Fund (IMF) shows that the economy in the Middle East has maintained a growth trend. It is estimated that the growth rate will be 3.2% in 2023 and will rise to 3.5% next year. IMF Managing Director Georgieva said that Middle Eastern countries actively promoted economic diversification, opened up broader space in attracting investment, encouraging innovation and developing science and technology, and showed great resilience and potential in the face of many uncertainties in global economic growth.
Multi-national economies are growing strongly.
With the increase of oil production and the sustained recovery of other industries, the economies of many countries in the Middle East will achieve rapid growth in 2022, and some industries will have strong growth momentum.
According to the report released by the Saudi Arabian government in March this year, the country’s gross domestic product (GDP) increased by 8.7% in 2022, exceeding $1 trillion for the first time. Thanks to strong economic growth and flexible employment policies, the unemployment rate in Saudi Arabia fell to 8% in the fourth quarter of last year, a low level for many years. Last year, the Saudi oil industry grew by 15.4%, and the non-oil sector grew by 5.4%. In addition, transportation, warehousing, communications, manufacturing and other fields all have higher growth.
The Central Bank of the United Arab Emirates recently said that the country’s economy grew by 7.6% in 2022, an 11-year high. Among them, non-oil foreign trade reached a record 2.23 trillion dirhams (1 dirhams is about 1.87 yuan). The hosting of the Dubai World Expo has injected impetus into the UAE’s economy. Studies show that the Dubai World Expo will continue to bring a total of 42.2 billion US dollars to the UAE, creating an average of 35,000 jobs every year before 2042.
According to the data of Egypt’s General Administration of Import and Export Control, the country’s non-oil exports increased by 12% in the first 10 months of last year, reaching 30.4 billion US dollars. The Ministry of Planning and Economic Development of Egypt predicts that the real GDP growth rate of Egypt will reach 4.2% in 2022. As one of the main sources of fiscal revenue and foreign exchange reserves, the Suez Canal’s revenue in 2022 reached 8 billion US dollars, a record high.
Other countries have also achieved rapid economic growth to varying degrees. In 2022, Oman’s GDP growth rate was 4.3%, and Turkey’s GDP growth rate was 5.6%. Jordan’s industrial index reached 127.6 in 2022, an increase of 12.2 compared with 2021, and the expansion of industrial export scale was the main driving factor.
The confidence index of foreign direct investment in 2023 recently released by Kearney, an international management consulting firm, shows that investors are optimistic about the growth prospects of major economies in the Middle East. Fitch Ratings, an international rating agency, believes that with the rising energy prices, the resumption of international flights and the sustained recovery of regional economic activities, the economic transformation of Middle Eastern countries will continue to be concerned by the international market under the promotion of economic diversification development strategy.
Improving business environment and promoting economic transformation
Affected by the Fed’s continuous tightening of monetary policy and other factors, many countries in the Middle East have depreciated their currencies and increased inflationary pressures since last year. Faced with challenges, Middle Eastern countries have adopted various measures to promote economic transformation, improve the business environment, increase efforts to attract foreign investment, and vigorously develop services such as tourism, logistics and finance.
The UAE has issued a series of policies to promote economic opening. For example, allowing foreign investors to have 100% ownership of onshore companies and implementing more flexible visa policies to attract more investment and talents. In order to promote green development, the United Arab Emirates has fully implemented "2021— Circular economy policy in 2031 encourages small and medium-sized enterprises to use green development tools and measures to establish sustainable consumption and production patterns. In January this year, Dubai announced an economic plan worth 32 trillion dirhams, including 100 innovative projects. Dubai hopes to double its foreign trade and investment in the next 10 years by increasing investment in various fields.
Saudi Arabia has stimulated the economy by improving laws and regulations, simplifying the examination and approval process, developing the digital economy and increasing infrastructure investment. The Saudi Tourism Development Fund launched a $133 million fund project last August to support the development of small and medium-sized enterprises. In order to attract domestic and foreign investment, the Saudi government has set up an investment promotion bureau, striving to invest more than 12 trillion riyals (1 Saudi riyal is about 1.84 yuan) by 2030.
The Egyptian government recently announced that it plans to increase the proportion of the private sector in the whole economic activities from the current 30% to 65% by 2025, and at the same time, it approved a new tax incentive plan to encourage investors to invest in the green economy and other emerging industries. The Central Bank of Egypt recently announced that it will provide loans of 150 billion Egyptian pounds (about 4.50 Egyptian pounds in 1 yuan) to the private sector of industry and agriculture.
The Jordanian government has vigorously developed industries such as tourism, information and communication technology. The government plans to create 1 million jobs within 10 years, and achieve the goal of increasing the per capita real income by 3% every year and doubling the GDP.
Many countries in the Middle East have also increased their investment in big data, artificial intelligence and other fields. In 2021, Kuwait formulated a tax incentive scheme for technology companies developing artificial intelligence; Turkey has established data research centers and laboratories to encourage enterprises to actively use artificial intelligence technology. Issam, head of the Gulf region of the World Bank, believes that it is a good time to further promote the green growth strategy. By developing green technologies and highly skilled labor, the production efficiency will be further improved and the regional economy will maintain growth.
Expanding cooperation with China and increasing development momentum
Middle East countries actively expand cooperation with other countries and regions. The economies of the Middle East countries and China are highly complementary, and their economic and trade cooperation shows strong vitality, resilience and potential. In 2022, the trade volume between China and Middle East countries reached US$ 507.152 billion, up by 27.1% year-on-year, and China maintained its position as the largest trading partner in the Middle East. Among them, China exported US$ 228.9 billion to Middle East countries and imported US$ 278.2 billion, up by 16.4% and 37.6% respectively, and the trade structure between the two sides was further optimized and more balanced.
The bilateral trade volume between China and Saudi Arabia in 2022 was US$ 116.04 billion, up 32.9% year-on-year. China and Saudi Arabia have continuously strengthened cooperation in the fields of energy, science and technology and infrastructure. Qatar is an important economic and trade cooperation partner of China in the Middle East Gulf region. In 2022, the bilateral trade volume between China and Qatar was US$ 26.55 billion, a year-on-year increase of 54.6%.
Not long ago, the Iraqi central bank announced that it was allowed to settle trade with China in RMB. In December last year, Yiwu and Saudi Arabia completed the first cross-border RMB payment business. Cross-border payment of RMB provides greater convenience for trade and investment between China and Middle Eastern countries, and further deepens the financial cooperation between China and Middle Eastern countries.
China’s global development initiative has been actively supported by 18 Middle Eastern countries, among which 12 countries have joined the "Group of Friends of Global Development Initiative". The cooperation between the two sides in high-tech fields such as 5G, artificial intelligence, new energy and space satellites has been deepening. The construction of major projects such as the new administrative capital project in Egypt and the China-Arab (United Arab Emirates) capacity cooperation demonstration park has been steadily advanced, and the suburban railway project of "Ten Days of Ramadan City" in Egypt has been officially put into operation … … The "One Belt, One Road" initiative is in line with the respective development strategies of the Middle East countries, which has effectively promoted the improvement of local people’s livelihood and economic development.
Aguiran Abdulaziz, Chairman of the GCC Federation of Commerce and Industry and Chairman of the Saudi Chamber of Commerce and Industry, said that more and more China enterprises have increased their investment in the Middle East, bringing more development opportunities to countries including Saudi Arabia. Professor Kyle Dibart of the School of International Relations of Qatar University said that China is an important engine of world economic development in the current weak global economic recovery, and deepening cooperation between Middle Eastern countries and China will not only benefit both sides, but also benefit the world.
(Dubai, Cairo)