Now is the time to invest in the Middle East
While economic activity in the Middle East and North Africa remained subdued towards the end of last year, the gradual increase in oil prices we are currently seeing will replenish financial coffers among oil-export-driven economies, which, in turn, will translate into stronger fiscal support.
This is according to the World Bank, which projects regional growth at around 1.9% in 2019. Despite slower global trade growth and tighter external financing conditions, domestic factors, particularly policy reforms, are anticipated to bolster growth in the region, the body said in a recent report.
“Growth among oil exporters is expected to pick up slightly this year, as Gulf Cooperation Council (GCC) countries as a group accelerate to a 2.6% rate from 2% in 2018. Higher investment and regulatory reforms are anticipated to support stronger growth in the GCC,” the report states.
“Iran is forecast to contract by 3.6% in 2019 as sanctions bite. Algeria is forecast to ease to 2.3% after a rise in government spending last year tapers off. Egypt is forecast to accelerate to 5.6% growth in FY2019, as investment is supported by reforms that strengthen the business climate and as private consumption picks up. Growth for both Morocco and Tunisia are anticipated to reach 2.9% in 2019, sustained by policy reforms and improvement in tourism.”
In light of these projections, Louise Robinson, MD of specialist lead generation and database consultancy CG Consulting, says that this is a good time to invest in the Middle East. Not only do projections for growth in the region remain stable, but many countries are diversifying their entirely oil-based economies, opening new opportunities for companies looking to break into the market, she adds.
In January, Saudi Arabia led the voluntary oil production cuts agreed upon with other OPEC and non-OPEC members, with oil output decreasing by 350 000 barrels per day in the month. This is helping to tighten the global oil market, pushing up oil prices. In addition, the non-oil sector is gradually benefiting from the government’s more accommodative fiscal stance, as well from subdued inflation which is supporting private consumption.
“The World Bank predicts that stronger government spending and increased public support in the Middle East will propel activity in the non-hydrocarbon sector this year. This is creating an opening for countries – and companies – looking to establish more extensive relationships in the region. For years, these countries have used their oil income to fuel their economies, and it is a vibrant market for many products, ranging from cars to ICT solutions,” Robinson says.
“However, breaking into new markets is challenging, and many businesses looking to establish or grow their presence in the region might find it difficult. In any country, relationships are key to establishing customers and partners, and these need to be created and nurtured over time. Finding the right people to talk to when entering a new region is even harder without those relationships. That’s where we come in. We offer specialised lead generation and data services that will help companies reach the right decision makers in the vertical and country they are targeting. We have a comprehensive database of decision makers across the Middle East, by vertical and industry, and the right relationships to ensure that companies wanting to grow in the region will be successful.”