As I covered in my predictions for 2023, the Middle East will be a hot topic in economic talk this year. Why?
It’s no secret that the GCC’s primary propellers are in the energy sector: the GCC accounts for 53% of the world’s proven oil reserves and nearly half of all known natural gas reserves. But this isn’t an automatic guarantee of sustained wealth. If the region wants to thrive in the long term, without relying exclusively on exhaustible fossil fuels, it will aim to diversify its economy sustainably—and that’s exactly what it’s doing.
The investment into this diversified growth is huge. Where we had mega-projects—billion-dollar and over developmental ventures—we now have giga-projects, launched as part of Saudi Arabia’s Vision 2030.
What are giga-projects?
Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, describes them as “designed to create new ecosystems and unlock new sectors,” of which Real Estate and Infrastructure are particularly significant. After all, once COVID damages on the region eases, commercial RE and tourism will be profitable sources of advancement, where they have not been a priority in the Gulf nations.
NEOM, for instance, is an ambitious dream of urban development structured entirely around pedestrians, creating almost 40k new jobs for Saudi Arabians. Along the Red Sea Coast, largely untouched, new (luxury) tourism destinations open each year, including the aptly titled The Red Sea.
The vision also shows us how the GCC will integrate into international economies: while private wealth funds in the region are investing plenty, Vision 2030 is attracting more foreign investment than ever.
This isn’t surprising—past being a welcome investment opportunity for those funds looking to where they can develop next, these giga-projects are completely transformational. Their execution over the next decade will establish a completely new market in the Middle East, and particularly in the Kingdom of Saudi Arabia, and give the region the cross-border reach it envisions.
What does this mean for the Middle East?
The mark of a successful economy is diversification. With the work @ Patrick Morgan is doing, I see it more and more globally, even in Europe, even when not prompted by a particular catalyst.
With how entrenched energy is in the GCC economies, it’s time to invest in other areas, and bring on board investment from domestic and foreign investment in equal measure. This way, the Middle East will take some important steps towards the international stage.
I’m pretty confident in my initial prediction that we’ll hear a lot about it in the coming months.
Photo Copyright: Getty.