DUBAI: Middle East economies are recovering from the coronavirus pandemic faster than anticipated, largely due to the acceleration of mass inoculation campaigns and an increase in oil prices. But the International Monetary Fund warned Sunday that an uneven vaccine distribution would derail the region’s rebound, as the prospects of rich and poor countries diverge.
In its latest report, the IMF again revised upward its 2020 economic outlook for the Mideast and North Africa, now outlining just a 3.4 percent contraction last year, with growth for the region’s oil exporters buoyed by a boom for commodities and rise in oil price, which hit $67 a barrel in March. Even with an expected dip to $57 a barrel by the end of 2021, the surge from last year’s all-time lows is boosting the oil-rich nations of the Gulf, such as the United Arab Emirates and Saudi Arabia, which also have moved swiftly toward widespread vaccination.
But elsewhere in the region, from Yemen and Sudan to Libya and Lebanon, where inflation soars, instability prevails and wars have left lasting scars, the damaging effects of the pandemic will drag on and cause economic harm, the IMF said — possibly for years to come.
“We are a year into the crisis and recovery is back, but it is a divergent recovery,” Jihad Azour, director of the Middle East and Central Asia department at the IMF, told The Associated Press. “We are at turning point. ... Vaccination policy is economic policy.”
The IMF expects economic growth to reach 4 percent for the Middle East this year. But that rosy outlook papers over the region’s deep economic divides.
For oil-rich economies, yawning deficits are expected to halve this year as revenues climb, more arms get jabbed and lockdown measures recede, said Azour. Thanks to strong government management of the virus’ successive waves and the jolt in oil prices, Saudi Arabia’s economy will expand 2.9 percent — compared to last year’s contraction of 4.1 percent. Higher oil prices come as the Organization of the Petroleum Exporting Countries (OPEC) and its allies keep a lid on production and it seems unlikely that the US will quickly lift sanctions on Iran’s critical oil sector.
The IMF expects the UAE’s economy to grow this year by 3.2 percent, with Dubai’s World Expo, now rescheduled for October 2021, key to the nation’s recovery. Dubai hopes the massive event will draw 25 million visitors and a series of deals, heralding a bright post-pandemic future.
The UAE has launched among the world’s fastest inoculation campaigns, with over 90 doses administered per 100 residents as of this week. Still, the collapse of hospitality, tourism and retail presents challenges for Dubai, where a cascade of layoffs hit foreign workers and slashed the emirate’s population by 8.4 percent, according to ratings agency S&P Global.
The outlook is bleaker for fragile and developing economies, many with lagging vaccination campaigns, few resources for fiscal stimulus and revenues drawn heavily from sectors like tourism that have been slowest to recover from the pandemic.
Whereas rich countries plan to vaccinate most of their population in a few months, swaths of the region — from Afghanistan and Gaza to Iraq and Iran — likely won’t inoculate a significant portion of their populations until mid-2022, the IMF said.
Even that estimate may be optimistic. The region’s lowest-income countries could end up waiting until 2023 at the earliest for mass vaccination, according to the report. Meanwhile, many countries’ beleaguered health systems are straining under resurgent waves of infections, prompting authorities to impose new restrictions and inflict more economic pain.
The IMF expects a sluggish 2021 recovery for Egypt and Pakistan, oil importers reliant on tourism that saw an exodus of foreign investors last year. The fund revised down its growth estimate for Jordan, where the youth unemployment rate has skyrocketed to 55 percent. Sudan remains mired in debt and threatened by instability, but its economy could grow for the first time in years as it gains new access to international financial networks.
Lebanon, in the midst of its worst financial crisis ever, remains the only Mideast economy at risk of further contraction. The country has defaulted on its foreign debt and failed to implement economic reforms, let alone form a government. A giant explosion at the Beirut port last year wreaked havoc on the capital. Discussions with the IMF led nowhere after the Cabinet quit.
Azour declined to even offer a specific economic forecast for Lebanon this year, citing “all the uncertainties.”
In Iran, the IMF found reason to praise economic growth after years of decline, noting that the government’s resistance to virus-induced lockdowns that would have devastated its sanctions-hit economy had saved it from the worst of the pandemic’s fallout. The country’s economy is expected to grow 2.5 percent in 2021, Azour said, building on slight gains last year.
But Iran’s recovery remains far off as its vaccinations lag, inflation eliminates people’s savings and economic policies overlook the most vulnerable. The IMF continues to consider Iran’s $5 billion assistance request, which would be its first loan since 1962. Meanwhile, American sanctions remain in force as torturous discussions begin over a return to Tehran’s tattered 2015 nuclear deal with world powers.
“A removal of the recently implemented sanctions will of course allow the Iranian economy to export more, trade more, and this will have a positive impact,” said Azour, while urging the government to tame inflation and better incorporate the private sector.
Despite the worsening inequality, the pandemic has shown the fortunes of the Mideast’s richest and poorest countries to be increasingly intertwined. Surging infections and foundering inoculation anywhere in the region could spread new variants that threaten overall economic and public health, the IMF reported.
“Therefore, any regional cooperation would be welcome going forward,” said Azour.
IMF: Vaccine inequity threatens Mideast’s economic recovery
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IMF: Vaccine inequity threatens Mideast’s economic recovery
- IMF expects economic growth to reach 4 percent for the Middle East this year
- Outlook bleaker for developing countries says IMF
Washington says Pakistan needs to address barriers to American exports, companies
- Islamabad, Washington last week kicked off negotiations after President Trump announced tariffs on countries, including Pakistan
- Talks expected to “sail through” but Pakistan’s textile industry may take a hit if they fail, warns financial analyst Shankar Talreja
KARACHI: Pakistan’s government needs to address its tariff and non-tariff barriers against American exports and companies, a spokesperson at the US consulate general in Karachi said on Thursday as both nations seek to forge closer trade ties through negotiations.
Reva Gupta, the spokesperson at the US consulate general in Karachi, made the comments a week after Pakistan and the US started what the official described as “dynamic” negotiations with Finance Minister Muhammad Aurangzeb on Washington’s imposition of tariffs.
The talks take place as US President Donald Trump imposed steep tariffs on a number of countries earlier this year, a move widely viewed as a setback for the global economy still recovering from the coronavirus pandemic. Pakistan faces a potential 29 percent tariff, currently under a 90-day pause announced in April, on its exports to the US due to a $3 billion trade surplus with the world’s biggest economy.
“In our bilateral engagements with Pakistan, we always message the need to jointly tackle challenges to our trade relationship, including the need for Pakistan to address its longstanding tariff and non-tariff barriers against US exports and companies,” Gupta told Arab News.
The tariffs could be a setback to Islamabad’s hectic efforts aimed at navigating a tricky path to economic recovery. Pakistan hopes to achieve sustainable economic growth driven by exports.
The US is Pakistan’s largest export destination. American exports to Pakistan were valued at $2.1 billion in 2024, up 4.4 percent ($90.9 million) from 2023, according to US government data. The import of goods from Pakistan to the US totaled $5.1 billion in 2024, up 4.9 percent ($238.7 million) from 2023.
“The United States and Pakistan share a robust economic relationship going back decades, of which trade and investment are key elements,” Gupta said. “That the United States remains Pakistan’s largest export market globally is a testament to this strong partnership”.
Gupta, however, referred to US Trade Representative’s (USTR) National Trade Estimate Report which highlights significant foreign barriers to US exports in various countries, including Pakistan.
The USTR details tariff and non-tariff hurdles ranging from Pakistan charging higher tariffs to US businesses to the closure of Internet services, imposing a ban on US beef imports and “perceived politicization” of the anti-graft National Accountability Bureau body.
“US companies have cited concerns that Pakistan has been imposing high tariff rates and, in some cases, additional duties, on products such as automobiles and finished goods,” the report said.
Qamar Sarwar Abbasi, a spokesperson of Pakistan’s finance ministry, did not respond to Arab News’ request for comment.
Some prominent American companies operating in Pakistan include Pepsi-Cola, General Electric International, Procter and Gamble, Pfizer and DuPont, according to the International Trade Administration, a US government agency.
Experts have warned the tariffs could harm Pakistan’s competitiveness in the global market, especially if regional exporters such as China, Bangladesh and Vietnam redirect more goods to Europe, intensifying competition in alternative markets.
‘LIKELY TO SAIL THROUGH’
However, economist Shankar Talreja, who is also the director of research at Topline Securities Ltd. brokerage form, said talks between Washington and Islamabad are likely to “sail through.”
“Pak-US trade talks are likely to sail through as Pakistan exports are primarily based on labor-intensive industry such as textile,” Talreja told Arab News.
He said Pakistan is likely to increase its import of agricultural commodities such as cotton and petroleum products from the US to fill the trade deficit.
But if talks fail, Pakistani textile exports may be adversely affected, he said.
“If talks are not successful, Pakistan textile exports may get hurt in future assuming other countries will successfully negotiate with the US,” the analyst warned.
The textile industry attracts the largest amount of foreign exchange for Pakistan, fetching $17 billion for the cash-strapped nation in FY2024.
Saudi Arabia, UAE lead global office quality fit-out investments: JLL
RIYADH: Saudi Arabia and the UAE are leading global investments in high-end office fit-outs, averaging over $2,400 per sq. meter, well above the global benchmark of $1,830, according to a new report.
An analysis by real estate advisory firm JLL, based on data from 25 countries, found that companies in both Gulf countries are prioritizing workspace upgrades as part of broader return-to-office strategies.
In the Middle East and Africa, corporate sentiment remains focused on targeted investments in design and functionality to support hybrid working models and enhance employee productivity.
The report added that initiatives in Saudi Arabia such as the regional headquarters program are playing a crucial role in driving demand for Grade A office spaces in the Kingdom. It offers incentives such as a 30-year corporate income tax exemption and withholding tax relief, alongside regulatory support for multinationals operating in the Kingdom.
Maroun Deeb, head of project and development services for Saudi Arabia and Bahrain at JLL, said: “The general optimism toward investing in workspaces is likely to continue throughout 2025 as growth-oriented corporations invest in office fit-outs to support their hybrid workplace policies.”
He added: “Targeted investments to enhance employee experience will see an increased focus on workplace design, innovative technology solutions, and refurbishment opportunities amid growing interest in healthier, energy-efficient workspaces.”
According to the analysis, companies in Saudi Arabia and the UAE are investing more on fit-outs to enhance workplace experience and employee performance.
The report added that Saudi Arabia and the UAE are among the premium global markets for quality fit-out investments on par with London, New York and Sydney.
JLL analyzed data from 25 countries and found that sustainability is a key driver in many relocation strategies and office fit-outs.
Some 68 percent of organizations globally plan to increase investment in sustainability performance in the next five years.
In the Middle East and Africa region, the sentiment is strongest in Saudi Arabia and the UAE, where 78 percent of corporate real estate leaders aim to enhance value through sustainability.
The report, however, added that organizations in the region face challenges in meeting sustainability requirements due to limited suitable stock and high costs of upgrading older buildings.
JLL added that early planning and integration of sustainability targets in relocation strategies and fit-out projects is crucial to address challenges.
“Offices that embrace innovative technologies and sustainable design principles and have higher levels of green certification command a premium, especially in Dubai,” said Gary Tracey, head of project and development services UAE at JLL.
He added: “Investments to improve sustainability will mitigate future operational expenses, remaining highly attractive to tenants seeking modern, efficient workplaces.”
The report further said that supply chain disruptions in 2024 disproportionately affected the office market in the Middle East and North Africa, tightening project timeframes and escalating pricing.
“From environmental and smart building systems to adaptive workspaces and settings, supply chain engagement is critical in managing costs and allowing for innovation in future-focused workspaces,” said JLL.
The report added that mechanical and electrical services now account for a higher proportion of office spend as stricter environmental and sustainability standards require more complex systems.
With 39 percent spending on M&E services, Cairo ranks among the top cities globally for average proportion of costs per sq. meter for such services, followed by Dubai at 30 percent and Riyadh at 29 percent.
In April, in a separate analysis, JLL said that the global office sector is rebounding as companies scale back hybrid employment options, increasing demand for workspaces.
In that report, JLL revealed that 59 percent of organizations globally are increasing investments in design and fit-outs.
Saudi Arabia and Syria explore investment cooperation in bid to boost economic integration
RIYADH: Saudi Arabia and Syria are set to advance economic cooperation following a virtual meeting between the Kingdom’s Minister of Investment Khalid Al-Falih and the Middle Eastern country’s Minister of Economy and Industry Mohammad Al-Shaar.
The two sides reviewed prospects for investment partnerships and discussed opportunities to expand collaboration in both public and private sectors, according to a report by the Saudi Press Agency.
The discussions focused on promoting high-quality investments across productive and service industries, with the goal of supporting Syria’s economic development and enhancing regional financial integration.
The meeting also examined ways to build a favorable environment for cross-border investments that can contribute to long-term stability.
Syria is undertaking significant efforts to revive its economy following years of conflict. The transitional government, led by President Ahmed Al-Sharaa, has initiated reforms, including the privatization of state enterprises, the lifting of import restrictions, and the encouragement of foreign investment.
Notable developments encompass a $7 billion energy infrastructure agreement with a Qatari-led consortium, the reopening of the Damascus Securities Exchange, and a $300 million fiber-optic project involving Gulf telecom firms.
“Al-Falih emphasized the importance of creating an enabling environment for expanding regional investment partnerships,” SPA said.
He added that Saudi Arabia is keen to assist in stabilizing and developing the Syrian economy, which he described as essential for serving mutual interests and promoting regional economic prosperity.
Additionally, the Kingdom and Qatar have pledged financial support for Syrian public sector salaries in May.
These initiatives, alongside the easing of Western sanctions, aim to stabilize the economy and attract international investment.
The talks are part of broader Saudi efforts to expand its global investment footprint and strengthen economic ties across regions.
In May, Saudi Foreign Minister Prince Faisal bin Farhan visited Damascus, where he met Al-Sharaa and pledged Saudi-Qatari support for Syria’s public sector, with a particular focus on energy and infrastructure investments.
The Kingdom has also ramped up high-level international engagements this year. Minister of Finance Mohammed Al-Jadaan participated in the Saudi-US Investment Forum in Riyadh in May to discuss cross-border investment opportunities.
In April, Al-Jadaan met with Pakistan’s Finance Minister Muhammad Aurangzeb in Washington to deepen financial and economic cooperation.
Additionally, Minister of Economy and Planning Faisal Alibrahim signed a memorandum of understanding with Spain on May 22 to promote trade diversification and new investment opportunities.
Alibrahim also represented Saudi Arabia at the World Government Summit in Dubai in February to advance Vision 2030 partnerships.
Saudi Arabia’s Port of NEOM installs 1st automated cranes, targets 2026 launch
RIYADH: Saudi Arabia’s $500-billion giga-project NEOM has installed the Kingdom’s first fully automated, remote-controlled cranes at its Red Sea port as it moves ahead with plans to begin operations in 2026.
The delivery of next-generation ship-to-shore and electric rubber-tyred gantry cranes marks a key milestone in the development of Terminal 1, which will accommodate the world’s largest container ships. NEOM is aiming to position the facility as a global logistics hub connecting Asia, Europe, and Africa.
The facility supports Saudi Arabia’s Vision 2030 by contributing to economic diversification through enhanced trade, logistics, and industrial capabilities. As global supply chains shift toward resilience and efficiency, NEOM’s strategic Red Sea location positions it as a vital link between Asia, Europe, and Africa.
Sean Kelly, managing director of Port of NEOM, said: “The arrival of our first automated cranes marks a tangible milestone as we lay the foundations for an advanced, future-ready port.”
He added: “We’re not only accelerating industrial growth in northwest Saudi Arabia, but we’re also setting a new benchmark for performance, efficiency, innovation and establishing a vital trade gateway for the Kingdom and the region beyond.”
The new cranes will enable high-efficiency operations while allowing remote control from ergonomic workstations.
Infrastructure developments, including a 900-meter quay wall and an 18.5-meter-deep channel, ensure the port can handle the largest vessels transiting the Suez Canal. Terminal 1 will also feature horizontal transport automation, boosting logistics capacity and regional industrial growth.
Alongside infrastructure upgrades, the port is investing in local talent development. A specialized program is training Saudi workers, including women, for high-tech roles such as remote crane operations. Ten participants from Saudi Arabia’s Tabuk region are currently in a two-year program combining technical training and mentorship.
Trainee Hajjer Alatawi said: “This experience has shown me that port logistics is far more complex than just moving cargo; it’s about teamwork, precision and responsibility. Seeing more Saudi women entering this space gives me hope for a future where industries are defined by skills, not gender.”
The press release added that by empowering Saudi workers with high-tech skills, “Port of NEOM is supporting NEOM’s vision of being a catalyst for a sustainable, diverse and innovative ecosystem that enables regional economic resilience and advances the goals of Saudi Vision 2030.”
UAE’s power capacity set to reach 79.1GW by 2035: GlobalData
RIYADH: The power capacity of the UAE is expected to reach 79.1 gigawatts by 2035, registering a compound annual growth rate of 3.4 percent from 2024, according to a report.
Findings from data analytics and consulting company GlobalData stated that annual power generation in the Emirates is expected to increase at a CAGR of 3.8 percent from 2024 to 2035, reaching 281.3 terawatt-hours.
Boosting power capacity is essential for the UAE as energy demand rises alongside a rapidly growing population, which is expected to reach 11.9 million by the end of the decade, up from 11 million today.
A significant factor contributing to this increased energy consumption is the high expatriate population, which accounts for around 88 percent of the total and drives the growth in residential and commercial energy needs.
“The power sector in the UAE offers abundant opportunities for investors, with the government poised to make significant investments in the expansion and modernization of its generation and supply infrastructure,” said Attaurrahman Ojindaram Saibasan, power analyst at GlobalData.
He added: “The anticipated increase in capacity is projected to occur predominantly in gas-based thermal power, as opposed to oil, where capacity is expected to remain stable. Manufacturers of gas turbines stand to benefit from this surge in gas-fired power capacity.”
GlobalData further said that the climate conditions in the UAE are exceptionally conducive to solar power generation, prompting the government to allocate extensive tracts of undeveloped land for solar parks, including both photovoltaic and concentrated solar power installations.
The report added that the UAE has the capability to not only meet local demand using solar energy but also cater to export needs.
The country is taking significant steps to bolster its renewable energy capacity, especially solar power, as a core strategy to address climate change.
It is targeting a clean energy capacity of 14.2GW by the end of this decade and is planning to invest between $40.84 billion and $54.45 billion to triple renewable energy contribution by 2030.
“Over the past decade, the UAE has experienced a marked increase in electricity demand, necessitating the importation of natural gas from Qatar,” said Saibasan.
He added: “In response to this growing demand and to diversify its energy portfolio, the UAE has strategically shifted away from exclusive dependence on natural gas, expanding into renewable and nuclear energy sectors.”
GlobalData further stated that the development of mega urban projects, such as Masdar City and Expo City Dubai, also highlights the need for sustainable energy solutions.
“These smart cities are at the forefront of innovation, yet they also contribute to higher electricity consumption. Consequently, this trend necessitates the expansion of the electrical grid and investment in smart infrastructure to meet the evolving demands,” Saibasan concluded.
