Mena region to achieve one of the highest levels of economic growth
Growth for the region is forecasted to be 4.3 per cent for the period of 2016 - 2020 in accordance with IMF data, just behind sub-Saharan Africa at 5.3 per cent, and South Asia at 5.9 per cent.
The Middle East and North Africa, or Mena, region has one of the highest levels of anticipated economic growth through 2020, according to a report issued by global management consultancy A.T. Kearney's Global Business Policy Council (GBPC) at the World Government Summit.
Growth for the region is forecasted to be 4.3 per cent for the period of 2016 - 2020 in accordance with IMF data, just behind sub-Saharan Africa at 5.3 per cent, and South Asia at 5.9 per cent. Global economic growth is set to rise over the next four years at 3.8 per cent annually. Although slower than previously anticipated, this is up from 2011-2015 period which saw average global growth rates of 3.5 per cent.
Rudolph Lohmeyer, director at the GBPC based in the UAE, said: "Four key dynamics set to shape economic growth significantly are the evolving resource slump cycle, sustained US economic resurgence, weak productivity growth, and a hiatus of globalisation. Together these dynamics suggest uneven, and in many cases lackluster growth prospects for markets around the world." Mauricio Zuazua at A.T. Kearney Middle East stressed: "In the years ahead and likely more than ever, government policy choices will have a great influence on whether individual countries are strong or weak performers."
Despite high levels of anticipated economic growth through 2020, the Young Presidents' Organisation (YPO) has found that economic confidence amongst CEOs in the region slipped in the final quarter of 2015 to a three-year low. The YPO Global Pulse Confidence Index for the Middle East and North Africa declined for the fifth consecutive quarter, falling nearly one point to 56.4, below the global confidence level of 58.0.
The drop in confidence was felt across most of the major economies within the MENA region, as low oil prices and political and social unrest in many countries continued to erode confidence. Economic confidence in the UAE fell 7.2 points to 50.3, its lowest score in the six-year history of the index. Similarly, Saudi Arabia continued its alarming slide, plummeting 14.7 points to 39.4, following a 17.9-point decline in the previous quarter. Additional declines occurred in Egypt, Kazakhstan, Pakistan and Syria. In stark contrast, Lebanon reported an increase in confidence, climbing 4.7 points to 53.6.
"Low oil prices and civil unrest in the region continue to impact confidence levels amongst business leaders," said Hatem El-Nazer, managing partner at HK Ventures and a member of the YPO Qatar and Cairo chapters. "Without a rise in oil prices or at least some control on production, it's likely that most oil exporting countries in the region will face a particularly tough 2016. While not all countries in the region are oil exporters, CEOs across the region will remain somewhat risk-averse in the current climate, particularly in the GCC where governments are under pressure to cut spending and increase their non-oil revenue."
Almost two-thirds of CEOs surveyed expected to grow revenues in the year ahead, compared to only 17 per cent who predicted a reduction in turnover. More than a third expected to increase employee numbers within their organisations, versus 13 per cent who expected to cut headcount. Finally, 48 per cent of respondents expected to increase fixed investment, versus only 13 per cent who predicted a reduction.
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