At its December 2019 12th edition in Dubai, the Arab Strategy Forum affirmed that a Second Great Recession highly unlikely: Report. This gathering run under the theme of ‘Forecasting the Next Decade 2020-2030’ concluded that after all, it’s business as usual with no ad-hoc surprises at all.
DUBAI — The global economy is not likely to witness another Great Recession-style collapse, despite several indicators to the contrary in recent months, according to a newly-published report by the Arab Strategy Forum in partnership with Good Judgement Inc., the world’s leading geopolitical and economic forecasting institution.
Titled ‘11 Questions for the Next Decade’, the wide-ranging and far-reaching findings and themes of the report, will be discussed in depth by former ministers, decision-makers and politico-economic thought leaders, including former US Vice President Dick Cheney, at the 12th edition of the annual Arab Strategy Forum in Dubai on Dec. 9 at the Ritz Carlton, Dubai International Financial Centre.
The ‘state of the world’ style report– tackles 11 vital mega-trends and questions that will define the global social, political and economic landscape in the 10 years ahead. Unlike previous editions, this year’s report looks to predict the future leading up to 2030 – a crucial time for many Middle Eastern economies whose visions are set to come to fruition by that year.
‘11 Questions for the Next Decade’ analyses 11 major political and macro-economic situations – or ‘mega-trends’ as the report terms them – and their likely consequences to determine where the world is headed, come 2030. Topics covered range from the global recession to the fragmentation of superpowers and Brexit to the Iranian regime and America’s anticipated fall from dominance, to the emerging US-China tech war and the prospective ‘splinternet’, water scarcity in the region and the growing crop of gas fields in the East Mediterranean region.
Qualitative and quantitative feedback and data was garnered for the report’s 11 sections following rounds of discussions on Good Judgement’s online platform, with a series of ‘ignition questions’ posed to ‘Superforecasters’ – 150 experts from diverse backgrounds, such as political scientists, economics researchers, scholars, and subject-matter experts in professions ranging from finance to intelligence, to management and medicine. The ignition questions for each topic seek answers to the issues at the heart of major economic change in the years ahead. The Superforecasters’ answers serve as indicators and monitors of predicted change based on the outlined global mega-trends.
Mohammad Abdullah Al Gergawi, President of the Arab Strategy Forum, said: “The report provides answers to the most pressing questions today, these outcomes will have a significant impact on regional and global policies. It explores a range of scenarios that will support the decision-makers of today and tomorrow to guide progress and prosperity for generations to come.
“Unlike previous years, this year’s reports predict the future of the region and the world over the next decade in the context of the current events that will have a major impact. They provide an up-to-date analysis of the increasing need for decision-makers to understand future scenarios on which to base their plans.”
As the world’s first platform for forecasting geopolitical and economic events, both regionally and globally, and targeting the most influential leaders and decision-makers in the Arab world and beyond, the Arab Strategy Forum will provide invaluable insights from the world’s foremost thought leaders on the crucial topics addressed in the report and elsewhere. Below is a list of the mega-trends, their related ignition questions, and a brief summary of the findings from the ‘11 Questions for the Next Decade’ report.
• Will the world avoid another Great Recession through 2030?
Based on current global economic performance records and data from the last 100 years of economic cycles, the report sought to find out whether the next recession will be a repeat of the Global Financial Crisis / Great Recession (2007-2009) or whether we are likely to see a return to an earlier pattern of a brief economic downturn followed by resurgent and steady growth.
The report’s Superforecasters said there is a 76 per cent chance that the world will not undergo another global financial crisis similar to the one in 2007 in the next decade, citing central banks’ improved technological ability to adapt and steer skidding economies out of difficulty. In their analysis of the last 100 years’ of business cycles, the Superforecasters concluded that the Great Recession was an outlier rather than the expected norm.
• Will China, Russia, or a G7 country leave the World Trade Organization by 2030?
Considering the emerging tendency of two, or a group of countries, setting out to establish new regional trading systems, such as the US-backed Trans-Pacific Partnership or the Russian-backed European-Asian Economic Union, the report noted that such new trading entities pose a populist threat to long-established global trading systems.
It goes on to rule out the possibility of China, Russia or one of the G7 countries withdrawing from the World Trade Organization by 2030, as doing so would cost more than the gains are likely to be worth in the long run. However, considering the relentless pressure on the WTO in the face of populism, the post-World War II trading body faces a big challenge in maintaining its status and platform in the next 10 years.
• Will China, Russia, the US, or the EU lose 0.5% or more of its territory or population before 2030?
After the fall of empires in the 20th century, the question lingers over whether countries and blocs will fragment in the 21st century. The Superforecasters anticipate a 5% likelihood that the EU will lose 0.5% or more of its territory or population before 2030, a 2% likelihood that Russia or China will, and 1% likelihood that the United States will. Though the uncertainties and problems hanging over the United Kingdom are mainly considered ‘peaceful’, market volatility and decreased consumer confidence could have an impact on the EU’s territory and population in the next decade. The Superforecasters also said that a split or fragmentation in China or Russia, will only occur through a violent disruption.
• Will the US economy be ranked 1st, 2nd or 3rd in 2030?
Despite being the largest economy in the world since the beginning of the 20th century, the US’s position as the world’s number one is under threat from the formation of a multipolar system and the emergence of several countries and regions that contribute today to the international community.
The report claims that there is a 65 per cent chance that the US will still be the world’s largest economy a decade from now, and a 33 per cent likelihood it will be second, after China.
The most prominent countries competing with the United States, in terms of nominal GDP, the report adds, are China, the European Union bloc, and India. And, as the US economy shrinks to the size of other countries, it will be less able to influence other nations of the world.
• Will OPEC’s share of global crude oil production remain above 33% in 2030?
The Organization of Petroleum Exporting Countries (OPEC) currently holds a share of about 40 per cent of the world’s crude oil production. But the future of the organization and its domination is likely to be called into question, with the emergence of hydraulic fracturing and new oil discoveries outside the Middle East and North Africa.
There is a 90 per cent chance that OPEC will supply more than a third of the world’s crude oil supply in 2030. However, its fiscal revenue is likely to result in a decline in its production. Given its resilience and adaptation to multiple challenges in past decades, including wars, revolutions and global recessions, the organization is viable in a carbon-free world, but new and innovative adaptation measures are needed later, the report pointed out.
• Will a cyberattack shut down a major infrastructure system in a G7 country for 1+ days before 2030?
The Superforecasters see a 66 per cent likelihood of a cyberattack shutting down a major infrastructure system in a G7 country for at least one day before 2030. Outside of the G7, there are countries perhaps more vulnerable. “It will be worth monitoring these situations as harbingers of larger-scale attacks elsewhere. For instance, in the Philippines, government hearings recently raised concerns that China could remotely ‘turn off power’ in the country,” the report noted.
• Will Lebanon be involved in a major military conflict by 2030?
After the discovery of the East Mediterranean gas fields off the coast of Cyprus, Lebanon and Egypt, questions have arisen over whether the East Mediterranean gas fields will enhance the stability of the region or pose a security risk. The report said there’s a risk that offshore gas fields could escalate tensions between nations over disputed drilling rights, but potential energy revenues are worthwhile, and will lead to a strengthening of the region’s economic stability, as well as the internal stability of the concerned countries and reduce risks of war.
• Will water scarcity cause a deadly conflict between Jordan & Israel, Egypt & Ethiopia, or Turkey & Iraq before 2030?
Water scarcity is unlikely to drive any regional conflict in the MENA region over the next decade, the report stated. There is a small, 1 per cent chance of a conflict on the flow of water between Jordan and Israel, according to the Superforecasters. Meanwhile, the chance of a conflict between Egypt and Ethiopia or Turkey and Iraq during the next decade will reach 3per cent.
• China-US tech war and peace
Will a ‘splinternet’ – with one Internet led by the US and one led by China – be avoided as of 2030?
The Superforecasters offer an 80 per cent chance that a ‘splinternet’ – one Internet led by the United States and one led by China — will not be in place by 2030. “Information will continue to flow across global networks, even as other types of political or ideological information will be blocked,” the report pointed out.
Flying drone shipments to grow 50pc in 2020: Gartner predicts, after worldwide shipments of IoT enterprise drones take off, as these flying electronic-mechanical eyes are increasingly in demand in all field industries such as those mainly related to the built and non-built environment.
Worldwide shipments of Internet of Things (IoT) enterprise drones (defined as flying drones) will total 526,000 units in 2020, an increase of 50 per cent from 2019, said Gartner, a leading research and advisory firm in a new report.
Global shipments are forecast to reach 1.3 million units by 2023, it added.
“The construction sector is an early adopter of drones, which causes construction monitoring to be the largest use case by shipments worldwide across the forecast,” said Kay Sharpington, principal analyst at Gartner.
“Shipments are estimated to reach 210,000 drones in 2020, and more than double by 2023. Drones are taking over tasks such as site surveying and earthworks management as they are faster and safer to carry out with a drone than on foot.”
To save costs when surveying sites, the number of global construction employees per drone will decrease from 2,400 to 640 between 2018 and 2020.
In the short term, most use cases will be based around surveillance and monitoring due to the technical complexity of other applications. In 2020, the second and third use cases by drone shipments will be fire services monitoring and insurance investigation.
The insurance industry is the second largest use case by shipments with 46,000 drone shipments forecast for 2020. Shipments are expected to nearly triple by 2023, to reach 136,000 that year.
“Drones are used to carry out inspections on buildings and structures after a claim has been made, to assess the extent and cause of the damage. They can also be used to evaluate the type and condition of the building when providing an insurance quote,” said Sharpington.
“Their benefits are valuable. For example, they reduce the cost of scaffolding, ladders and employee time and provide a comprehensive photographic record of the building condition.”
To survey claim areas at a lower cost, Gartner expects insurance drones will grow from one per 152,000 people in 2018 to one per 72,000 people worldwide in 2020.
Police and firefighting agencies globally are deploying drones in public safety operations, wildfire management, crime scene investigation, and search and rescue operations. Gartner estimates that the number of drones used by police and firefighters will grow from one per 210,000 people to one per 47,000 people between 2018 and 2020.
“Fire service drones use cameras and thermal imaging to identify fire sources, extreme heat areas, trapped people and the positions of firefighters in the field,” said Sharpington. “Consequently, firefighting agencies can deploy resources in the right areas in emergencies and investigate incidents while minimizing risk to lives.”
Adoption of drones in the retail sector to rise rapidly after 2023
Drones used for retail deliveries will provide customers with rapid service and allow retailers access to customers in remote areas. However, the regulatory restrictions and logistical challenge of coordinating flight paths, managing airspace over densely populated areas and managing various payloads means that retail, overall, is a longer-term opportunity for drones.
Drone shipments will total 25,000 in 2020 and will rise to 122,000 units in 2023. Following this predicted trajectory, the biggest opportunity for retail will come after 2023.
In addition, Gartner estimates that the number of employees per drone will decrease from 73,000 global retail employees per drone in 2018 to 18,000 global retail employees per drone in 2020. – TradeArabia News Service
NAGOYA, Japan (Reuters) – Saudi Arabia is set to take over the G20 presidency for a year as it seeks to bounce back from an uproar over its human rights record and last year’s killing of journalist Jamal Khashoggi. Foreign ministers attend a dinner during the G20 foreign ministers’ meeting, in Nagoya, Japan November 22, 2019. Charly Triballeu/Pool via REUTERS
The kingdom’s new foreign minister, a prince with diplomatic experience in the West, landed in Japan’s Nagoya city on Friday to meet with his counterparts from the Group of 20 nations.
Prince Faisal bin Farhan Al Saud was appointed in October in a partial cabinet reshuffle, joining a new generation of royals in their 40s who rose to power under Crown Prince Mohammed bin Salman, 34, the de facto ruler of the world’s top oil exporter.
Saudi Arabia – a key U.S. ally in confronting Iran – has faced heavy Western criticism over the murder of Saudi national Khashoggi, its detention of women’s rights activists and its role in the devastating war in Yemen.
Diplomats say the G20 might help put Riyadh’s problems behind it and could prompt it to close more disputed files such as the Yemen war and the boycott of Gulf neighbour Qatar, though they have yet to see much progress.
King Salman has hailed the kingdom’s G20 presidency as proof of its key role in the global economy. [nL8N28041F]
Prince Faisal will pick up the baton at a ceremony on Saturday in Nagoya, where G20 foreign ministers have gathered for talks.
Japan – which headed the G20 this year – was the kingdom’s second-largest export market last year, at $33 billion, according to IMF trade data.
Apart from its reliance on Saudi oil, Japan has deepened its ties to the kingdom thanks to Japanese technology conglomerate SoftBank Group. Riyadh has been a big supporter of SoftBank’s massive Vision Fund.
Japanese Foreign Minister Toshimitsu Motegi told Prince Faisal he was pleased to meet him for the first time and both sides wanted to boost relations, according to a read-out from Japan’s foreign ministry.
Motegi praised Saudi work to stabilise southern Yemen, where Riyadh orchestrated a deal to end a power struggle between Yemen’s government, which it backs, and southern separatists. [nL8N27L6J1]
King Salman also said this week Riyadh wants a political settlement in Yemen, where it has battled Iran-aligned Houthis in a nearly five-year war that has killed tens of thousands and drive parts of the country to the brink of famine.
A diplomatic source said there had been an “apparent de-escalation” in Yemen’s conflict in recent weeks. The source said Saudi airstrikes killing civilians would not be “a great backdrop for hosting the G20” and would not mesh with the kingdom’s message of opening up.
Diplomats said that Saudi Arabia plans more than a dozen G20 summits throughout the year on tourism, agriculture, energy, environment and digital economy.
Top diplomatic and business contacts suggest Riyadh has already gotten over much of the opprobrium it received over Khashoggi’s murder, but it still struggles to attract foreign investors, said analyst Neil Partrick.
A Saudi court charged 11 suspects in a secretive trial and Western allies imposed sanctions on individuals. But Riyadh still faces heat from some governments saying the crown prince – known as MbS – ordered the murder. He has denied this though said he takes ultimate responsibility as de facto ruler.
Riyadh has sought to fix its image or turn attention to its social reforms since Khashoggi’s 2018 killing at the hands of Saudi agents in Istanbul.
A share sale of giant Saudi state oil firm Aramco this month and a bond sale earlier this year – under a drive to diversify the largest Arab economy away from oil – attracted interest in the traditional sectors of energy and finance.
After boycotting the Saudis’ annual “Davos in the Desert” summit in 2018, Western executives returned to the 2019 gathering last month. “Davos in the Desert” is unrelated to the annual World Economic Forum in Davos, Switzerland.
Reporting by Ellen Francis in Nagoya and Stephen Kailin in Bahrain with additional reporting by David Dolan in Nagoya; Writing by Ellen Francis; Editing by Mark Heinrich
China is manoeuvring to avoid being sucked into the Middle East’s numerous disputes amid mounting debate in Beijing on whether the People’s Republic will be able to remain aloof yet ensure the safety and security of its mushrooming interests and sizeable Diaspora community.
China’s challenge is starkest in the Gulf. It was compounded when US President Donald J. Trump effectively put China on the spot by implicitly opening the door to China sharing the burden of guaranteeing the security of the free flow of energy from the region.
It’s a challenge that has sparked debate in Beijing amid fears that US efforts to isolate Iran internationally and cripple it economically could lead to the collapse of the 2015 international agreement that curbed Iran’s nuclear program, accelerate Iran’s gradual breaching of the agreement in way that would significantly increase its ability to build a nuclear weapon, and potentially spark an unwanted military confrontation.
All of which are nightmare scenarios for China. However, Chinese efforts so far to reduce its exposure to risk are at best temporary band-aid solutions. They do little to address the underlying dilemma: it is only a matter of time before China will have no choice but to engage politically and militarily at the risk of surrendering its ability to remain neutral in regional conflicts.
That is precisely the assessment that Iran hopes will persuade China alongside Russia and the European Union to put their money where their mouth is in countering US sanctions and make it worth Iran’s while to remain committed to the nuclear accord.
The problem is that controversy over the agreement is only one of the multiple regional problems. Those problems require a far more comprehensive approach for which China is currently ill-equipped even if it is gradually abandoning its belief that economics alone offers solutions as well as its principle of no foreign military bases.
China’s effort to reduce its exposure to the Gulf’s energy supply risks by increasing imports from Russia and Central Asia doesn’t eliminate the risk. The Gulf will for the foreseeable future remain a major energy supplier to China, the region’s foremost trading partner and foreign investor.
Initially delivering approximately 500 million cubic feet of gas per day or about 1.6 percent of China’s total estimated gas requirement in 2019, the project is expected to account with an increased daily flow of 3.6 billion cubic feet for 9.5 percent of China’s supply needs by 2022.
China is likely hoping that United Arab Emirates efforts to stimulate regional talks with Iran and signs that Saudi Arabia is softening its hard-line rejection of an unconditional negotiation with the Islamic republic will either help it significantly delay engagement or create an environment in which the risk of being sucked into the Saudi-Iranian rivalry is substantially reduced.
Presumably aware that Gulf states were unlikely to engage with Iran without involvement of external powers, Iran appeared to keep its options open by also endorsing the Russian proposal.
The various manoeuvres to reduce tension and break the stalemate in the Gulf put Mr. Trump’s little noticed assertion in June that energy buyers should protect their own ships rather than rely on US protection in a perspective that goes beyond the president’s repeated rant that US allies were taking advantage of the United States and failing to shoulder their share of the burden.
Potentially, Mr Trump opened the door to an arrangement in which the United States would share with others the responsibility for ensuring the region’s free flow of energy even if he has given no indication of what that would mean in practice beyond demanding that the United States be paid for its services.
Dr James M. Dorsey is a senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, an adjunct senior research fellow at the National University of Singapore’s Middle East Institute and co-director of the University of Wuerzburg’s Institute of Fan Culture
Romain Duval and Davide Furceri, authors of this article that obviously elaborates on the currently so-called developing countries. It does not ignore that there is some differentiation between oil and/or other scarce natural resources and the non-exporters of the same. It might as well be talking about these two categories of countries but perhaps along with the character traits described in the image below. Why you might wonder. Simply because How To Reignite Growth in Emerging Market and Developing Economies as developed here, could well apply to all countries in the MENA region, perhaps worldwide not for the same reasons.
Let us, in the meantime, read what they say.
Emerging markets and developing economies have enjoyed good growth over the past two decades. But many countries are still not catching up with the living standards of advanced economies.
At current growth rates, it would take more than 50 years for a typical emerging market economy to close half of its current income gap in living standards, and 90 years for a typical developing economy.
Our research in Chapter 3 of the October 2019 World Economic Outlook finds that implementing major reforms in six key areas at the same time—domestic finance, external finance, trade, labor markets, product markets, and governance—can double the speed of income convergence of the average emerging market and developing economy to the living standards of advanced economies. This could raise output levels by more than 7 percent over a six-year period.
Structural reforms can yield sizable payoffs.
More room for reforms
Policies that change the way governments work—known as structural reforms—are difficult to measure. They often involve policies or issues that are not easy to quantify, such as job protection legislation or the quality of supervision of the domestic banking system.
To address this, the IMF recently developed a comprehensive dataset covering structural regulations in domestic and external finance, trade, and labor and product markets. The data cover a large sample of 90 advanced and developing economies during the past four decades. To the five indicators, we added the quality of governance (for example, how countries control corruption) from the World Governance Indicators.
The new indicators show that, after the major wave of reforms in the late 1980s and—most importantly—the 1990s, the pace slowed in emerging market and developing economies during the 2000s, especially in low-income developing countries.
While this slowdown reflects the prior generation of reforms, as in advanced economies, there remains ample room for a renewed reform push, particularly in developing economies—notably, across sub-Saharan Africa and, to a lesser extent, in the Middle East and North Africa and the Asia-Pacific region.
Reforms can boost growth and living standards
Based on our empirical research of reforms in 48 current and former emerging markets and 20 developing economies, we find that reforms can yield sizable payoffs. But these gains take time to materialize and vary across different types of regulations. For example, a domestic finance reform of the size that took place in Egypt in 1992 leads to an increase in output of about 2 percent, on average, six years after implementation. We get a similar result for anti-corruption measures, whose effects are sizable in the short run and stabilize at around 2 percent in the medium term. In the other four reforms areas—external finance, trade, product markets, and labor markets—the gains are about 1 percent six years after the reform.
For the average emerging market and developing economy, the results imply that major simultaneous reforms across all six areas considered in this chapter can raise output by more than 7 percent over a six-year period. This would increase annual per capita GDP growth by about 1 percentage point, doubling the average speed of income convergence to advanced-country levels. Model-based analysis—which captures the longer-term effect of reforms and provides insights on the channels through which they affect economic activity—points to output gains about twice as large as the empirical model over the longer term (beyond 6 years).
One channel through which reforms increase output is by reducing informality. For example, lowering barriers to businesses’ entry in the formal sector encourages some informal companies to become formal. In turn, formalization boosts output by increasing companies’ productivity and capital investment. For this reason, the payoff from reforms tends to be larger where informality is pervasive.
Getting the timing, packaging and sequencing right
Some reforms work best when the economy is strong. In good times, reducing layoff costs makes employers more willing to hire new workers, while in bad times it makes them more willing to dismiss existing ones, magnifying the effects of a downturn. Similarly, increasing competition in the financial sector at a time of weak credit demand may push certain financial intermediaries out of business, further weakening the economy.
In countries where the economy is weak, governments may prioritize reforms—such as strengthening product market competition—that pay off regardless of economic conditions, design others to alleviate any short-term costs—such as enacting job protection reforms now with a provision that they will take effect later. These reforms can also be accompanied with monetary or fiscal policy support where possible.
Reforms also work best if properly packaged and sequenced. Importantly, they typically deliver larger gains in countries where governance is stronger. This means that strengthening governance can support economic growth and income convergence not just directly by incentivizing more productive formal enterprises to invest and recruit, but also indirectly by magnifying the payoff from reforms in other areas.
Finally, to fulfill their promise of improving living standards, reforms must be supported by redistributive policies that spread the gains widely across the population—such as strong social safety nets and programs that help workers move across jobs. For reforms to be sustainable and therefore effective, they need to benefit not just some, but all.
About the IMF Blog
IMFBlog is a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day. The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.
An interesting interval notably for all those industries already devoting billions of Dollars to building these E-cars, thus affecting not only the whole world’s manufacturing and energy generation industries alike but also the planet’s climate. But this obviously not happening overnight, is somehow phased as described in this article.
Electric cars are often seen as one of the great hopes for tackling climate change. With new models arriving in showrooms, major carmakers retooling for an electric future, and a small but growing number of consumers eager to convert from gas guzzlers, EVs appear to offer a way for us to decarbonise with little change to our way of life.
Yet there is a danger that fixating on electric cars leaves a large blind spot. Electrification would be very expensive for the lumbering lorries that haul goods across continents or is currently technically prohibitive for long-distance air travel.
Beyond all the enthusiasm surrounding electrification, currently light-duty passenger vehicles only comprise 50% of total global demand for energy in the transportation sector compared to 28% for heavy road vehicles, 10% for air, 9% for sea and 2% for rail.
Put simply, the current focus on electrifying passenger vehicles – though welcome – represents only part of the answer. For most other segments, fuels will be needed for the foreseeable future. And even for cars, electric vehicles are not a cure-all.
The unfortunate truth is that, on their own, battery electric vehicles (BEVs) cannot solve what we call the “100 EJ problem”. Demand for transport services are expected to rise dramatically in the coming decades. So the International Energy Agency (IEA) projects that we need to significantly reduce the amount of energy each vehicle uses just to keep total global energy demand in the transport sector roughly flat at current levels of 100 exajoules (EJ) by 2050. More than half of that 100 EJ is still expected to come from petroleum products and, by then, the share of light-duty vehicles in transport sector energy demand is expected to decline from 50% to 34%.
The vast majority of existing passenger trips can be accommodated by existing battery electric vehicles so, for many consumers, buying one will be an easy decision (as costs come down). But for those who frequently take very long journeys, the focus also needs to be on lower-carbon fuels.
Petroleum substitutes could extend sustainable transport to heavier vehicles and those seeking longer range, while using the existing refuelling infrastructure and vehicle fleet. Whereas battery electric vehicles will impose wider system costs (for example, the charging infrastructure needed to connect millions of new electric vehicles to the grid), all the transition costs of sustainable fuel substitutes are in the fuels themselves.
Our recent study is part of a renewed focus on synthetic fuels or synfuels (fuels converted from feedstocks other than petroleum). Synfuels were first made on an industrial scale in the 1920s by turning coal into liquid hydrocarbons using the so-called Fischer-Tropsch synthesis, named after its original German inventors. But using coal as a feedstock produces far dirtier fuel than even conventional petroleum-based fuels.
One possible route to carbon-neutral synthetic fuels would be to use woody residues and wastes as feedstock to create synthetic biofuels with less impact on the environment and food production than crop-based biofuels. Another option would be to produce synfuels from CO₂ and water using low-carbon electricity. But producing such “electrofuels” would need either a power system that is very low cost and ultra-low-carbon (such as those of Iceland or Quebec) or require dedicated sources of zero-carbon electricity that have high availability throughout the year.
Synthetic biofuels and electrofuels both have the potential to deliver sustainable fuels at scale, but these efforts are still at the demonstration stage. Audi opened a €20M e-gas (electro fuel) plant in 2013 that produces 3.2 MW of synthetic methane from 6 MW of electricity. The €150M Swedish GoBiGas plant was commissioned in 2014 and produced synthetic biomethane at a scale of 20 MW using 30 MW of biomass.
Despite the many virtues of carbon-neutral synthetic fuels though, most commercial-scale projects are currently on hold. This is due to the high investment cost of pioneer process plants combined with a lack of sufficiently strong government policies to make them economically viable and share the risk of scale-up.
Government and industry attempts to encourage people to buy electric vehicles aren’t a problem in themselves. Our concern is that an exclusive focus on electrification may make solving the 100 EJ problem impossible. It is too early to tell which, if any, sustainable fuels will emerge successful and so the most pressing need is to scale up production from the current demonstration stage. If not, when our attention finally turns away from glossy electric car advertisements in a few years, we will find ourselves at a standing start in addressing the rest of the problem.
In the World Economic Forum’s Global Agenda, stories on Migration and Workforce and Employment abound. This one on India‘s record-breaking diaspora is the latest. It is doubly interesting because of a) the significant presence of more than 8 million NRIs (non-resident Indians) in the Gulf and b) it is reflective of a mutual necessity relationship between the Gulf and India.
In 2019, remittance flows to low- and middle-income countries are expected to reach $550 billion, becoming their largest source of external financing. ‘Indians abroad sent back $80 billion, making the country the leading recipient of funds from overseas.’ Per Image above: REUTERS/Pawan Kumar.
Katharine Rooney, Senior Writer, Formative Content, the Indian diaspora elsewhere seem to be not that dissimilar to that of the GCC’s.
Despite a sizeable outflow, India is still home to 1.39 billion people – and by 2027, it’s set to overtake China as the world’s most populous country. While there has been progress in reducing extreme poverty levels, there are still 176 million people living in poverty in India, and money remitted by expatriates is an important part of economic development and growth. In 2018, Indians abroad sent back $80 billion, making the country the leading recipient of funds from overseas.
The point of this article dated September 5, 2019, published by World Economic Forum in collaboration with Visual Capitalist and elaborated by Jeff Desjardins, Editor-in-Chief, Visual Capitalist, is to possibly enlighten us on the actual world situation. We could also get a clear picture of the actual position of the MENA region’s countries in the world economy at 5th as ranked by the World Bank.
The world economy is in a never-ending state of flux.
The fact is that billions of variables — both big and small — factor into any calculation of overall economic productivity, and these inputs are changing all of the time.
Buying this week’s groceries or filling up your car with gas may seem like a rounding error when we are talking about trillions of dollars, but every microeconomic decision or set of preferences can add up in aggregate.
And as consumer preferences, technology, trade relationships, interest rates, and currency valuations change — so does the final composition of the world’s $86 trillion economy.
Country GDPs, by Size
Today’s visualization comes to us from HowMuch.net, and it charts the most recent composition of the global economic landscape.
It should be noted that the diagram uses nominal GDP to measure economic output, which is different than using GDP adjusted for purchasing power parity (PPP). The data in the diagram and table below come from the World Bank’s latest update, published in July 2019.
The Top 15 Economies, by GDP
The above 15 economies represent a whopping 75% of total global GDP, which added up to $85.8 trillion in 2018 according to the World Bank.
Most interestingly, the gap between China and the United States is narrowing — and in nominal terms, China’s economy is now 66.4% the size.
A Higher Level Look
The World Bank also provides a regional breakdown of global GDP, which helps to give additional perspective:
The low-income countries — which have a combined population of about 705 million people — add up to only 0.6% of global GDP.
Looking Towards the Future
For more on the world economy and predictions on country GDPs on a forward-looking basis, we suggest looking at our animation on the Biggest Economies in 2030.
It is worth mentioning, however, that the animation uses GDP (PPP) calculations instead of the nominal ones above.
Setting up a business is exciting, but it requires level-headed planning. To be successful you need to consider the logistics performance of the country in question, along with its reputation, ease of company setup process, simplicity of doing business, and opportunities for future growth. So, when you’re looking at where to locate in the Middle East and North Africa (MENA) region, it’s important to weigh up the pros and cons of the different regions. If you’re considering this part of the world, here are four tips to improve your chances of finding the right place for your MENA business:
1. The best location for logistics A quick look at the World Bank Logistics Performance Index (LPI) helps define all the logistical considerations in six points: customs, infrastructure, ease of shipping, tracking and tracing, timeliness, as well as logistic services. These factors are important for all businesses and vital if you will be importing and/or exporting. Why the UAE has got logistics covered: In that World Bank Logistics Performance Index, the one MENA country that stands head and shoulders above all the rest is the UAE. It ranks 1st in the GCC and MENA. Globally it’s listed 11th, ahead of the United States and Switzerland. In terms of specifics, the UAE is placed 5th in the world for international shipments and 4th for timeliness. Meaning you can expect to have your deliveries reach their destinations by the deadline.
And it’s important not just to stop at Dubai when it comes to thinking about locations for your new MENA business. Investigate the other emirates that boast excellent logistical networks as well as ample warehousing space at a lower cost. Setting up in Ras al Khaimah, for example, is the perfect jumping-off point to do business across the UAE, the Gulf and entire MENA region, and it’s less than an hour’s drive to Dubai.
2. Finding an easy setup process Here we have to consider procedures, time, cost and minimum capital required to start a company. Different countries in the MENA region take different approaches to helping new businesses achieve this. There are a huge number of options, so it’s important to locate your company in a top-level business hub that can offer you a tailor-made solution. The UAE is always going to score highly when it comes to easy setup. Look for a hub within the UAE that gives you flexibility, allowing you to choose whether you want to set up on the mainland or in a free zone.
Why the UAE has the easiest setup process: In the World Bank’s Doing Business 2019 report, the UAE was ranked 25th in the world for starting a business, with a score of 94.06 out of 100. The MENA average was 82, with only one other regional country, Bahrain (89.57), breaching the top 100. Why? Well, the UAE was deemed to have hugely streamlined procedures and greatly reduced setup times. It’s worth looking outside of Dubai and Abu Dhabi as well– Ras al Khaimah has put in place a highly-simplified and fast-tracked business setup process. So, look for a hub that offers this level of service, and get your company off to a strong start. It’s about costs as well: Choosing the right location can mean halving your setup costs.
3. The importance of a good reputation The MENA country you set up in will be a reflection of your business. Set up in one that is well respected for business equality and fairness and this rubs off on the organization itself. It also affects how you are perceived by companies in the MENA (and wider) region with which you do business.
Why the UAE’s reputation speaks well for your business: The UAE has a great reputation for business for a number of reasons. It’s politically stable, has a strong economy, and offers state-of-the-art infrastructure. Its laws prohibit monopoly and encourage competition, while maintaining intellectual property rights and trademarks. No surprise then that it’s probably the major international business hub of the Middle East. Even if you do business outside of the UAE, being based there puts you in great standing with the MENA region.
4. Having the room to expand Whatever the size of your business right now, you’re probably aiming to grow. This means you need to keep options open because what might be the best choice now, especially in terms of location and suppliers, may change in the future. You need a location that offers flexibility. One that has good access to other markets and one that lets you expand your offering. For example, you could be attracted by the easy setup process and zero taxation offered by many UAE free zones, but perhaps one day you will want to do business directly with the mainland. Finding the right hub that allows that type of flexibility will be a vital part of your decision-making. So, it’s important to think about your immediate requirements, and how those requirements might change down the road.
Why the UAE helps your company grow: On top the strong economy and great transport links, choosing the right business hub in the UAE brings peace of mind that you are set up for years to come. You haven’t just taken an ‘off the shelf’ solution but got one that truly reflects the kind of business you want to run today, and tomorrow.
Question your way to success
When setting up in the MENA region, you need to make an informed decision rather than a leap of faith. You can improve your chances of success by asking the right questions about your business needs and the locations on offer. The UAE ticks the right boxes– the question, then, is making sure you pick the right economic zone and the right location within it.
Opinions expressed by Entrepreneur contributors are their own.
Ask anybody with their ear to the rail of the global games industry about the MENA region and they’ll very likely assert that it offers ‘opportunity’.
The vast area has for some time now been associated with market potential that games companies from across the globe would be wise to harness.
However, the detail around what founds that opportunity, how it should be seized and the reality of its distinct challenges can seem like something of a mystery. A thorough analysis, however, reveals a region that might not be as atypical or enigmatic in its machinations as many assume.
As the oft-talked about BRIC region – ‘Brazil, Russia, India and China’ – has blossomed from ‘emerging’ to ‘emerged’, the MENA countries have been quietly building an impressive momentum of their own. And it is the mobile games sector specifically that provides the region with its most striking prospects.
By MENA, of course, we mean ‘Middle East and North Africa’. It is ultimately an area without a firm or agreed definition. But for the purposes of this article – which kickstarts a series of pieces looking at MENA – we’re considering numerous countries, including but not limited to, Jordan, Saudi Arabia, the United Arab Emirates/Dubai, Bahrain, Iran and Lebanon.
Nations such as Israel, Turkey and Egypt also warrant reflection, though those are places with games sectors that are relatively well-known to the outside world and even distinct from the rest of their MENA family.
Speaking the same language
While one could spend a lifetime developing a universally agreed framing of ‘MENA’, the reality is that the opportunity for mobile games developers, publishers, platforms and service providers is significantly defined by a language; not a list of countries. That language is Arabic, and one thing is clear; the Arabic speaking world provides a substantial audience for those that make a living from mobile games to consider.
“The reason why the mobile gaming market [here] is so interesting comes from the fact that Arabic is the fourth most spoken language in the world, yet less than one per cent of all content available online is in Arabic,” offers Hussam Hammo, CEO of Jordanian outfit Tamatem, which specialises in publishing and maintaining mobile games in the MENA region.
“More than 70 per cent of the population of the Arabic speaking countries – around 400 million – use Arabic as their default language on their smartphones. Add to that that countries like Saudi Arabia have the highest ARPPU in the entire world, and you have a perfect opportunity.”
Record-breaking ARPPU alone should immediately prick the ears of industry observers. For while the world’s biggest gaming market China has ARPPU of around $32, Saudi Arabia’s ARPPU is a striking $270. Tamatem’s own figures, meanwhile, point to consumers in MENA spending $3.2 billion on games broadly back in 2016.
Arabic is the fourth most spoken language in the world, yet less than one per cent of all content available online is in Arabic.
And then there are those 400 million people keen to digest Arabic language smartphone titles. They are presently served with a bounty of gaming content; but a great deal more fails to support both Arabic language – and culture.
An appetite for growth
It seems clear there is an underserved and ravenous appetite for gaming in MENA, which means one thing; there is a generous capacity for growth. Indeed, consulting giant strategy& predicts that by 2022, mobile gaming across MENA will stand as a $2.3 billion industry.
Smartphone penetration has also hit alluring levels in many MENA countries. 46 per cent of Saudi Arabia’s 33,554,000 residents own a smartphone, according to Newzoo data. That’s just shy of 15.5 million people.
The United Arab Emirates, meanwhile, can boast of an 80.6 per cent smartphone penetration rate. That is against a relatively modest population of 7.5 million, but it still presents a demographic worth serious attention.
Contemporary data on smartphone penetration on Jordan is a little harder to come by, but the Pew Research Center’s data for 2016 lists a 51 per cent rate. The same study gives Lebanon a slight lead at 52 per cent. Of course, not every country in MENA provides such appealing device penetration, but looking at the region as a whole, growth is forecast.
The global trade body for mobile network operators, the GSMA, counted 375 million unique mobile subscribers across MENA in 2017. They expect that number to reach 459 million by 2025. By that same year, GSMA predicts the area will count 790 million individual SIM connections, not including IoT devices. That’s a striking 118 per cent penetration rate, if you consider the region’s entire population, across all languages.
As for the make-up of mobile device breakdown in MENA, region-specific data is in relatively short supply. StatCounter figures for specific countries in the area do, however, paint a fairly familiar picture.
As of July 2019, in Saudi Arabia specifically Android accounts for 65.6 per cent of in-use handsets, while iOS trails at a still-healthy 34.12 per cent. That leaves a trivial amount of unknown and fringe or legacy OSs, including the likes of Series 40, which still has a 0.01 per cent penetration rate in the country.
Over in Jordan, Android dominates with 84.65 per cent of the market, while iOS accounts for 15.15 per cent of smartphones. And in the UAE, Android can claim 77.34 per cent of the market, with iOS holding on to 22.18 per cent. The picture appears reasonably consistent, including looking back over the last year.
The Google Play and Apple App Stores dominate, but that is a topic PocketGamer.biz will return to in-depth later in this series of features.
‘Growth’ remains the keyword if you look at MENA as a place to succeed with gaming content. And, when considering mobile specifically, that growth which will likely be significantly facilitated by providing a great deal more games in the Arabic language. Those 400 million handsets set to Arabic by default are active now, and their number is likely to climb.
Not that language is the only factor in localising a game for MENA. The region is culturally a different place from both the West and areas like China or Southeast Asia. Making a game created outside of MENA culturally appropriate for the market will perhaps offer the biggest challenge to companies external to the area.
The UAE and the Gulf region are at the forefront globally in terms of 5G launches and plans.
It’s a perfect example of the distinction between translation and true localisation. As for the key to mastering cultural localisation? Collaboration with resident MENA outfits may be an absolute necessity.
Tamatem is one of a number of companies specialising in publishing to MENA, and it’s certainly not alone in its effort. Babil Games, MENA Mobile and others are striving to connect international games companies with the local market.
Another factor central to the potential of mobile gaming in MENA is, of course, the arrival of 5G networks. GSMA points out that in some parts of MENA, 5G has already been commercially deployed.
“The UAE and the Gulf region are at the forefront globally in terms of 5G launches and plans,” confirms Jawad Abbassi, head of Middle East and North Africa at GSMA.
“Operators in MENA – particularly in the GCC States – are among the first to launch 5G networks commercially. Following these launches, operators in 12 other countries across MENA are expected to deploy 5G networks, covering around 30 per cent of the region’s population by 2025. By then, regional 5G connections will surpass 50 million. Early global 5G pioneers include the GCC countries, South Korea, the United States, Australia and the United Kingdom.”
Clearly, when it comes to infrastructure, much of the MENA region rivals some the rest of the world’s tech leading nations.
Ultimately, of course, MENA is a diverse and multifaceted place. Its various nations all bring their own distinct make-ups, and in taking a broad perspective this round-up has perhaps just served to highlight the fundamentals of a very real opportunity.
The figures speak for themselves. But if you want to move on what MENA offers? You’ll want a little more detail.
That is why this piece is just the start of a series of articles looking at the companies, countries and trends shaping MENA’s mobile gaming future.
So keep an eye on Pocketgamer.biz and consider joining us at Pocket Gamer Connects Jordan on November 2nd and 3rd, where you can come and meet the publishers, developers and game tech outfits that might be the future of your success in MENA.