Saudi Arabia is taking the right steps to unlock its growth potential
In the choppy economic waters of the pandemic recovery, nations around the world face a wave of challenges to achieving sustained, positive growth – particularly the headwinds caused by geopolitical rifts and an uncertain global economic future.
However, the GCC states are well positioned to ride this wave of uncertainty. The overall success of their Covid-19 responses, combined with the strength and dynamism of their large-scale transformation projects and diversification programs, has ensured that they have maintained a level of security and stability in the region.
Perhaps most notably, Saudi Arabia’s efforts to transform its business landscape and position itself as a global corporate leader have set the nation on track to become the world’s fastest-growing major economy by 2022. The momentum behind the kingdom is clear for all to see.
The International Monetary Fund has forecast gross domestic product to grow by 7.6 percent for 2022, the kingdom’s highest in more than a decade, with 3.7 percent growth forecast for 2023 — the year that, according to several economic indicators, will kick in. tough for many developed economies.
Given its robust economic outlook, Saudi Arabia has unsurprisingly held the attention of investors from various markets.
A large part of this growth is attributed to close supervision by the country’s central bank – Sama – which has strengthened the financial sector and reduced systemic risk through several smart monetary policy moves. Plans are also underway for an even tighter regulation of the financial sector, which will help limit risk factors in the future as well.
Nor can we dismiss the measures taken by Saudi Arabia’s sovereign wealth fund – the Public Investment Fund – and its focus on accelerating private sector growth. Later this month, it will host the sixth edition of the Future Investment Initiative – or FII, an annual event run by the FII Institute that convenes regional and global experts to unlock and stimulate the next phase of business expansion and leadership in the region.
FII’s theme this year is “Investing in Humanity: Enabling a New Global Order” and it will address a number of relevant challenges, solutions, trends and how best to approach them in a world at the helm of a meta-industrial revolution. Some notable topics covered are supply chain shocks, super apps, artificial intelligence, sustainability and the use of technology for equity.
This platform is proof of Saudi Arabia’s commitment to global challenges and forward-looking approach. It will not only continue to keep the nation in the global spotlight, but also give a boost to the region, giving room for further engagement and growth.
In terms of broader regional goals, FII’s initiatives will also help attract foreign direct investment, an important and impactful pathway to the next phase of regional economic development.
The GCC countries have historically had access to internal capital so there has not been an urgent need to prioritize FDI, but there really is no better time than now to invite foreign investors into the region, show them how far our nations have come while supporting their goals and also addressing long-term national visions.
The entire region has the capacity to increase FDI inflows in the coming years. It is also well located geographically in addition to offering a promising and safe socio-economic environment that will attract investment from external players.
Among the many benefits of increased FDI inflows that the Gulf countries can benefit from are higher employment, greater resources, increased local competition and a boost in cross-border activity.
The GCC nations are uniquely placed in the global business arena at this stage, and factors such as stability, security and the capacity to respond effectively to crises have not gone unnoticed by potential global investors. This is our time to shine, but we must channelize our best resources to instill further investor confidence and establish our region as a lucrative and promising prospect for potential investors.
To begin with, there is room for improvement in terms of business infrastructure and regulatory environments. Saudi Arabia and the United Arab Emirates have made significant strides in the ease of doing business and serve as excellent benchmarks for other nations looking to foster an environment that supports entrepreneurship.
We need to ask ourselves how we can facilitate the most seamless market entry for global players and offer them incentives, including packages, synergistic partnerships with local players and access to local resources that may not be as readily available in other markets.
Nations in the region can also cooperate with each other to secure regional investment agreements with foreign organizations and present a range of opportunities that will attract international players to the region.
An important factor in attracting FDI is an excellent talent pool. While GCC is home to a motivated and educated workforce, it will help foster a culture of continuous upgrading so that our workforce is at the forefront and ready to support new market entrants.
The Gulf nations must also continue to brainstorm ideas to grow non-oil sectors and approach foreign investors in the myriad industries in the regions that offer enormous potential for growth. These include tourism, logistics, manufacturing, research and development, education and healthcare.
The whole world is on the road to recovery after a long period of uncertainty, but there is no better time than now to harness our strengths and channel our resources towards a more prosperous and secure future.
Investors, especially those in the US and Europe, have noticed not only the economic progress of the GCC countries, but also their excellent governance and successful patterns of implementing security and societal progress. FII leads this space, and we must build on the efforts so that the world can get a truer picture of our region’s talent, commitment and capabilities.
We must strike while the iron is hot. Attracting foreign players and increasing the inflow of FDI in the region will be an excellent way to recharge economic activity, address our long-term growth goals and establish the region as a safe choice in the eyes of investors from various markets around the world.
An important lesson that has come from shared experience in recent years is that we must stay informed about global trends while at the same time having the tools to mitigate unexpected crises. This is best done through collaboration and it is truly inspiring to see our region engaging with experts and forming partnerships that will support us all in the future.
Published: 20 October 2022, at 09.00