Details

Comprehensive economic planning, integrated economic performance earn GCC economies investment edge, locally & internationally

 

-Egypt’s consumer goods sector most investment-conducive among others in 2018

 

-UAE seeks to draw $70 billion investments into industrial sector by 2025

 

-KSA targets $80 billion in FDI inflows into tourism & leisure sector by 2026

The Gulf Cooperation Council (GCC) region represents a viable source of business attraction and economic regeneration, despite the varying performance of various economic platforms. The real estate sector across the GCC countries is witnessing growing tidal waves without reaching stability levels in terms of demand or supply at the moment, with price indices fluctuating, depending on location, sources of demand and the nature of stimulus packages being implemented.

While benchmarking the region’s economic performance against those of the more developed economies, Al Mazaya Holding’s weekly real estate report shows that economies of the region have introduced a set of incentives to optimise performance, capitalising on the fact that the ability of various sectors to contribute to GDP has become now much better than that recorded over recent years.

The report shows that the energy sector in the region is witnessing a growing performance and remarkable improvement that can contribute to restoring stable performance levels.

The consumer goods sector is also seeing a surge in demand indicators and investment plans due to strong demand.

The health sector has taken a large share of the investment stimulus packages over the past years, which is expected to reflect positively on the volume of cash flows. This will reflect favourably as well on its ability to generate stable returns and contribute to the reduction of unemployment rates and inflation at a time when the capital markets seemingly look attractive to investments despite continued volatility.

According to the report, the consumer goods sector in Egypt has become one of the most attractive investment platforms over the current year, while the sectors of nutrition and medicine are expected to capture the largest volume of foreign direct investment (FDI) inflows to the market, followed by the sectors of engineering, energy, real estate and building material.

There is no doubt the growth is attributed to the massive population base in Egypt, estimated at more than 90 million, in addition to an improved purchasing power over the recent period, with consumer demand either being stable or growing. Market data shows that the pharmaceutical sector’s sales amounted to about LE 60 billion at the end of 2016 and to LE 65 billion at the end of 2017.

Al Mazaya report indicates that the construction materials and chemicals sector in Egypt is likewise set to attract new domestic and foreign investments, while natural gas is becoming an effective contributor to the expansion of the industrial sector and to improving its competitive external production capacity. In the meantime, the energy sector has started to represent a magnet for investments on the back of the recent gas discoveries that will definitely draw more investments from foreign companies operating in this sector.

With regards to the UAE, the report points out that the wholesale, retail, real estate, financials, insurance and manufacturing sectors account for most of targeted FDI inflows into the country, according to recent financial and economic data, which showed as well that  the UAE economy is gaining around 50 per cent of GCC States-bound investment inflows, with  UAE companies  strengthening the competitiveness  of the UAE economy at the level of industries and advanced international services, such as aviation industry and services, transport and renewable energy sector. This will enhance accumulated national successes and promote the reputation and efficiency of the UAE economy and the business environment within the country.

The report pointed out that the UAE economy aims to attract $70 billion in new investments into the industrial sector by 2025, to ratchet to 25% the sector’s contribution to the country’s GDP, which would give the UAE economy the ability to properly address besetting challenges and secure big leaps over the next few years.

In Saudi Arabia, the report argues that the economic performance of the Saudi oil sector is unrivalled, highlighting in the same time the momentum witnessed across other economic sectors involved in diversifying sources of income, including tourism and entertainment sectors. The report noted that the tourism sector features prominently high on the Saudi Vision 2030, in view of the myriad prospects held by this sector, which is expected to contribute more than $80 billion to GDP by 2026.

Accordingly, it has become clear, according to the report, that the Saudi tourism sector is set to achieve greater successes over the coming years, following the impressive growth made over the past few years, which had beaten expectations and achieved nearly SAR 240 billion in 2017. In this respect, the report noted that the global tourism sector contributes 10% to the world gross domestic product. Therefore, the Saudi tourism sector is now set to make more achievements and attract FDI inflows, thanks to the ongoing government support and private sector readiness.

On the other hand, the report underlined the importance of the role played by the banking sector in the countries of the region during the past years, citing the resilience of Gulf banks that enabled them to address the besetting challenges and secure fresh returns and achievements. In this regard, the report highlighted the significant role played by the banking system in shielding the GCC economy against geopolitical risks.

The report predicts that saving and lending rates will drive the banking sector and maintain a stable credit position. The mega-projects being implemented are directly driving growth, stimulating spending and bank credit by at least 5% during the current year. The rise in bank assets, the growth of the finance sector and the improvement in capital sufficiency and liquidity ratios are other forces adding to the resilience of the banking sector, which ultimately contributes directly to the development of all economic sectors.

The report stressed that the incentive plans and strategies being implemented on various economic sectors in the region have reflected positively on the overall economic performance and have become a direct contributor to the economy of the region, securing the attractiveness required to draw sustainable FDIs. It should be noted here, according to the report, the overall economic performance is one of the indicators anticipated by domestic and foreign investors to inject new and diversified investments into all walks of life. Thus, the growth secured by a certain economic sector or a group of sectors increase overall economic mobility.