‘Insufficient, uneven’ growth rates to weigh on MENA

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The above-featured image is that of the World Bank’s MENA Economic Update on how ‘Insufficient, uneven’ growth rates to weigh on MENA, is explained in Gulf Times of Qatar ViewPoint. Here it is:

Just as the war in Ukraine is disrupting supplies and fuelling already-high inflation, economic growth in the Middle East and North Africa (Mena) region is forecast to be “uneven and insufficient” this year, according to the World Bank.

Growth rates in the region envisage a narrative of diverging trends.
As oil exporters benefit from surging prices, higher food prices have hit the whole region.

The GCC is expected to notch up 5.9% growth this year, buoyed by oil prices and helped by a vaccination rate much higher than the rest of Mena.
But most Mena economies — 11 out of 17 — are not seen exceeding their pre-pandemic GDP per capita in 2022, says the World Bank.

GCC economies have seen a relatively strong start to 2022 with the hydrocarbons sector having benefited from increased oil production so far this year, says Emirates NBD.
Its survey data for the first quarter of the year point to a solid expansion in non-oil sectors as well, with strong growth in business activity in the UAE, Saudi Arabia and Qatar.
In the wider Mena region, however, countries like Egypt, Morocco and Tunisia – home to large, mainly urban populations, but lacking oil wealth – are struggling to maintain subsidies for food and fuel that have helped keep a lid on discontent.

Egypt has been struggling to maintain a bread subsidy programme used by about 70mn of its citizens with the coronavirus pandemic hitting the national budget, and surging wheat prices are exacerbating the challenge.

The World Food Programme has warned that people’s resilience is at “breaking point,” in the region.
Global foods costs are up more than 50% from mid-2020 to a record and households worldwide are trying to cope with the strains on their budgets.
In North Africa, the challenge is more acute because of a legacy of economic mismanagement, drought and social unrest that’s forcing governments to walk a political tightrope at a precarious time.

The MENA region’s net food and energy importers are especially vulnerable to shocks to commodity markets and supply chains resulting from Russia’s war on Ukraine, according to the International Monetary Fund.

That’s in countries where the rising cost of living helped trigger the Arab Spring uprisings a little over a decade ago.
The region’s GDP is forecast to rise 5.2% this year after an estimated 3.3% expansion last year and a 3.1% contraction in 2020.

“Even if this high growth rate for the region as a whole materialises in this context of uncertainty, and there’s no guarantee that it will…(it) will be both insufficient and uneven across the region,” according to Daniel Lederman, World Bank lead economist for the MENA region.

Countries that are net importers of oil and food and which entered 2022 with high levels of debt as a ratio of GDP are most vulnerable, he said, pointing to Egypt and Lebanon as examples.
Even before Russia invaded Ukraine, food prices had been rising around the world, driven by the higher shipping costs, energy inflation and labour shortages that have followed in the pandemic’s wake, along with extreme weather.
Food crisis was likely to worsen in the Middle East and North Africa as Covid-19 continued, according to a report from the regional directors of Unicef, the Food and Agriculture Organisation, WFP and World Health Organisation in July 2021.

Energy investments in MENA will continue to grow

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Energy investments in Middle East and North Africa (MENA) are forecast to grow in 2022 from $805 billion and continue in the next five years on the strength of higher oil and gas prices and planned unconventional gas and upstream investments.

Energy investments in MENA will continue to grow: Apicorp

Nicolas Thevenot

For petrochemicals, the drive for further integration and rationalisation will continue with reconfigurable petrochemical plants shifting to high-margin products such as plastic packaging films and healthcare and hygiene products, The Arab Petroleum Investments Corporation (Apicorp), a multilateral development financial institution, said in its annual Top Picks 2022 outlook on the key trends that are expected to shape the Mena energy markets landscape this year.

“The strong pipeline of investments we are seeing in the downstream projects reflects the region’s push to direct more funds to this sector, especially in brownfield petrochemicals projects versus greenfield ones. This makes sense in light of the current market conditions which favor improving cost and operating efficiencies in existing projects rather than sheer expansion,” said Nicolas Thevenot, Managing Director of Corporate Banking at Apicorp.

As for the energy markets, the report forecasts that they will remain comparatively stable during 2022 due to higher oil production by Opec+ and non-Opec countries and increased gas production and LNG supply. Brent is expected to average between $65/bbl. and $75/bbl. As for gas, the JKM and TTF/NBP hub prices in Asia and Europe are expected to cool down considerably from their all-time highs of 2021, especially after the winter season.

Meanwhile, the uptick in regional energy investments, which registered a modest $13 billion increase in Apicorp’s latest five-year outlook, will continue over the mid-term on the strength of higher oil and gas prices throughout 2022.

Among the trends the report examines is the impact of oil and gas prices on energy investments in the region and the main factors weighing down on broader economic recovery. 

“Despite the volatility in commodity prices which is expected to persist throughout 2022, the good news in the short-term is that oil and gas prices will likely remain elevated throughout the year, providing support for energy investments including renewable energy and ESG-related projects. Power sector investments in Mena are also expected to continue to thrive, with an accelerating shift towards renewables. Collectively, the region is expected to add nearly 20 GW of solar power over the next five years,” noted Dr Ahmed Ali Attiga, CEO of Apicorp.

The Mena region will take centre stage in the ongoing global energy transition as all eyes shift to Egypt, which will host COP27 in November — and UAE for COP28 in 2023. Yet while the transition continues to steadily gain momentum, the report notes that it may be marred by mixed policy signals from governments as they attempt to balance imperatives which are oftentimes very difficult to align: emissions reduction, energy affordability and energy security.

Thus, a sustainable and comprehensive policy is needed in order to avoid tilting the policy scale too far towards in favor of one of these factors, as this may lead to unintended consequences such as market distortions, heightened volatility, and energy shortfalls.

The already substantial pressure on policymakers is expected to be further exacerbated by continued volatility in commodity markets in 2022 due to the pandemic, uncertainty over macroeconomic policy, and supply chain disruptions. Despite the modest –-albeit uneven—recovery in 2021, it will take time for this improvement to migrate downstream and ease cost pressures this year.

The report’s analysis of energy investment trends suggests that the expected robust oil and gas prices in 2022 have triggered an opportunity to return to pre-pandemic activity. 

The uncertainty around Covid recovery will continue to influence how market dynamics will ultimately play out. Given the global vaccine inequity and a constantly evolving virus, governments are still grappling with the dilemma of public health versus economic recovery. 

In addition to global trade, supply chains and services, the current surge in cases globally will also adversely affect international travel and tourism. This will dent economic growth during 2022, which has already prompted a slight downward revision of the 2022 GDP growth forecasts in some regions and a likely asymmetric global recovery that is not necessarily sustainable for all countries.

Another uncertainty stems from the need for governments to introduce fiscal austerity measures to rein in spending and curb soaring inflation. Although markets ended 2021 with high returns (27% in the case of the S&P 500 index), high jobs growth and soaring commodity prices pushed inflation rates higher.

A fear of stagflation looms as public fiscal stimulus packages are withdrawn, asset purchasing programs are tapered and interest rates rise. While these measures will very likely cause economic recovery to slow down, the lagging unemployment rates are expected to remain relatively high amid a simmering inflationary cycle that may turn out not to be transitory after all. — TradeArabia News Service

The above-featured image is for illustration and is credit to Oil Price.

Geospatial intelligence for infrastructure development to fight climate change

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How India can use geospatial intelligence for infrastructure development to fight climate change by Madhusudan Anand is a story that should be also common to those countries of the MENA region because there are certainly more similarities in The race to zero emissions, between the MENA region and India than differences.

Here are a few ways geospatial intelligence can be the catalyst for India’s smart status ambitions.

At the recent COP26 summit in Glasgow, India promised to reach Net Zero by 2070 — essentially balancing the total carbon dioxide emissions with its elimination from the environment — called carbon neutrality.

However, India is the world’s fourth-largest emitter of carbon dioxide after China, the US, and the EU. The latter two have issued a commitment to reach Net Zero by 2050. 

Despite the incredible progress made towards sustainability across the country, India seems to be lagging on a global playing field when it comes to mass scale solutions.

Naturally, there’s a lot of expectations and hopes riding on the government’s initiatives, including on the recent PM Gati Shakti Master Plan, which aims to create holistic infrastructure across the country through the incorporation of a centralised geospatial data platform.

The Rs 100 lakh-crore initiative is envisioned to ensure transparency, standardisation, and most importantly, sustainability through efficiency.

The programme will bring together 16 central government agencies, including the Railways, Roads and Highways, Petroleum and Gas, Power, Telecom, Shipping, Aviation, and more.

The overarching idea is that a smart city is sustainable — equipped to mitigate climate change’s effects by harnessing the power of technology. 

Geospatial knowledge can provide answers for most everyday problems, especially developing sustainable smart cities. Urban spaces contribute to around 80 percent of global greenhouse gas (GHG) emissions. However, they are also responsible for 80 percent of a country’s GDP.

With the intersection of artificial intelligence and geospatial data — including census data, satellite imagery, remote sensing, weather data, cell phone data, drawn images, and social media data — urban planning can be highly efficient and contribute to better living conditions both environmentally and financially.

Astoundingly, the market of geospatial analytics is expected to grow at a CAGR of 24 percent between 2020 and 2025.

Here are a few ways geospatial intelligence can be the catalyst for India’s smart status ambitions. 

Environmental repair 

Consumption of resources, energy, ecosystems, and transport directly impact climate change. Geospatial intelligence can help monitor emission sources through collaborative workflows that harness big data to arrive at efficient solutions.

Detailed maps can help evaluate the productivity of land to arrive at its habitable or agricultural status. GIS also makes it easy for civic authorities to balance nature with humans in urban cities to avoid unnecessary culling of green spaces and wildlife conservation. Moreover, it can monitor and correct pollution and noise levels accordingly. 

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CEO appointments in the UAE surpass pre-pandemic highs

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ZAWYA informs that 42% of UAE CEOs are non-nationals, and 5% are women, compared to global averages of 24% and 6%, therefore CEO appointments in the UAE surpass pre-pandemic highs per a recent report. Would this statement of fact have any meaning other than those consequent to the pandemic?

The image above is for illustration and is of the UAE appointing a new Governor.

Businessman wearing a mask in the office for safety during the pandemic. Image used for illustrative purpose. Getty Images

The appointment of new CEOs has surpassed pre-pandemic highs as companies demonstrate confidence about their prospects and their ability to find the right leader, according to a new report.

The Route to the Top 2021 by Heidrick & Struggles showed that the number of CEOs appointed across 14 countries was up 22.6 percent in the first half of 2021 when compared with the first half of 2018, and up 181 percent compared with the second half of 2020.

The report showed that 42 percent of CEOs in the UAE are non-nationals, compared with a global average of 24 percent, and five percent are women, compared with a global average of six percent. Of the 14 countries surveyed, Ireland had the highest proportion of female CEOs at 14 percent, while Hong Kong had the highest proportion of non-national CEOs at 76 percent.

More than a third of UAE CEOs (35 percent) had previous CEO experience in their last two roles.

Globally, newly appointed CEOs are more likely to be women (11 percent) and to be from countries other than where the company is headquartered (30 percent) and to have cross-border experience 46 percent.

In the UAE, 42 percent of new CEOs have advanced degrees, 16 percent have cross-border experience, and 23 percent have less than one year of experience as CEOs.

Other findings are that 42 percent of UAE CEOs were appointed before the age of 45 but the average age is 55, 30 percent were formerly heads of divisions but only two percent had previous COO experience, compared to 14 percent globally.

“Looking ahead, COVID 19 has raised expectations on the role of businesses in addressing concerns such as climate, equality, cybersecurity and other external realities; boards are rethinking the process of the CEO succession to cope with these changes, said Alain Deniau, head of CEO and board of directors practice, Heidrick & Struggles, MENA.

“This means that companies will open up to new perspectives and ideas. In addition, we expect more attention to shift towards leadership skills rather than specific skills.”

(Writing by Imogen Lillywhite; Editing by Seban Scaria)

Imogen.lillywhite@refinitiv.com 

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Factors that can help the Middle East shape its own future

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A write up that is concerned not only about the Middle East but the whole of the MENA region was authored by Kelly Boyd Anderson in the Arab News. It is about those Factors that can help the Middle East shape its own future. Are these as realistic as they should be?

Are those Factors that can help the Middle East shape its own future

The Middle East and North Africa region has long thwarted efforts to predict its future. However, while there will always be unpredictable events, identifying the trends and other factors most likely to shape the region’s outlook is a helpful place to start.
There are multiple regional analyses and foresight projects from think tanks, educational institutions and other experts, including the EU Institute for Security Studies, the Middle East Scholar Barometer, and the Middle East Institute. Drawing on these and other studies, there are several factors that many experts believe will be key in shaping the MENA region over the next five to 10 years.
Global factors will affect the region; in turn, MENA will have an impact on the world. One major shift with global consequences is the rise of regional powers with the resources to pursue their own interests and exert influence abroad. Regional powers will increasingly shape the region’s future and how it interacts with global actors. The regional countries will have to manage changes in America’s role, along with China’s growing power.
Climate change is another trend with global and regional effects. MENA will experience some of the most severe consequences of climate change. The region’s resilience will depend on how successfully its governments improve infrastructure, pursue sustainable development and implement adaptation strategies over the next decade.
At the same time, as a major source of hydrocarbons, the region contributes to climate change and must be part of global efforts to reduce carbon dioxide emissions. There is significant potential for the region to become a leader in renewable energy and in technologies to limit emissions, but governments need to increase investments in these areas.
The pandemic will have long-term impacts on global business, economics and health, and these will affect MENA. The pandemic accelerated or shifted global developments in business, economics and technology that will have consequences in the region, including advances and changes in artificial intelligence, supply chains, travel and more. These global shifts will create opportunities and risks for governments and businesses. In particular, developing high-quality, accessible digital infrastructure is key to ensuring the region can compete globally.
Other factors that will shape the future are specific to the region. Demographic change will continue to play a major role in MENA’s economic and social context. The region’s population growth has started to slow, but its famous “youth bulge” will remain important over the next decade.
The region still has an opportunity to benefit from a “demographic dividend,” but this will require urgent job creation, including educational reforms to better prepare young people for the workforce. Migration within and out of MENA will be another key demographic factor, with impacts beyond the region.
Unfortunately, war and its aftermath will also play a crucial role. The conflict in Syria has killed hundreds of thousands, caused widespread displacement inside the country and historic refugee flows to other countries and left 90 percent of the population living in poverty.
Libya, too, has experienced civil war. Ending and recovering from these conflicts will require enormous resources over the coming years, with long-lasting social, economic and political consequences.
There is also a risk that areas of instability could descend into war. Iraq and Lebanon are experiencing violence and widespread dysfunction, with the potential to again become conflict hotspots. Many countries across the region face governance crises, being unable or unwilling to respond to the public’s needs and concerns.
While the initial political changes that stemmed from the 2011 Arab Spring protests have been rolled back, the uprisings demonstrated that popular movements are important players in the region. Many countries have continued to experience significant protests. In a Middle East Scholar Barometer survey earlier this year, 30 percent of experts said that the “uprisings are likely to return within the next 10 years,” while 46 percent said that the “uprisings never stopped and are still ongoing in different forms.”
Global and regional economic factors will also drive change. Youth unemployment is one of the region’s greatest challenges, making job creation and educational reform essential. Aging infrastructure, uneven access to the internet, food insecurity, and large fiscal deficits are other key issues.

One major shift with global consequences is the rise of regional powers with the resources to pursue their own interests and exert influence abroad.

Kerry Boyd Anderson

However, the region has significant economic opportunities, including a young population that is interested in entrepreneurship and is familiar with digital tools, the potential to expand women’s participation in the workforce, and significant space to expand the private sector. The extent to which governments and businesses implement policies to utilize these opportunities and manage the challenges will determine much of the future.
There are many other relevant factors, including the closing window on a two-state solution to the Israeli-Palestinian conflict, the role of violent extremist groups such as Daesh, the challenges and opportunities of increasing urbanization, and the uneven distribution of assets and risks around the region.
The future is impossible to predict. However, by identifying the trends and factors that are likely to shape the coming years, leaders can prepare to mitigate risks and build on opportunities. People can have conversations about what type of future they prefer and work toward it, rather than being carried along by the tides of history.

Kerry Boyd Anderson is a writer and political risk consultant with more than 18 years of experience as a professional analyst of international security issues and Middle East political and business risk. Her previous positions include deputy director for advisory with Oxford Analytica. Twitter: @KBAresearch