New Opportunities for the Middle East

Middle East countries are realigning priorities to adjust to post-coronavirus realities, particularly anticipating a drawn-out recovery period for their economies hit hard by the pandemic. In Kuwait, Prime Minister Sheikh Sabah Khaled Al-Hamad Al-Sabah has called for understanding amid ‘critical circumstances’ that prompted a cut in government spending to address the pandemic’s economic impact.

Al-Sabah and the Kuwaiti cabinet earlier discussed stimulus measures to overcome this phase with the least damage possible.

Actually, they should look at the other face of the medal. Indeed, Middle Eastern countries should not “waste” the ongoing coronavirus crisis, but should make changes to build up the resilience of their economies. This could include addressing systemic issues and providing more support to businesses.

In the coming two to three years, we’re going to see, certainly, a very, very large impact that’s going to be asymmetric, depending on the readiness of countries. Then, the “big hit” in oil prices that would have an impact on countries in the Gulf. However, the current situation is a golden opportunity to really change, to reform and to transform our economies into more resilient economies that have ability to bounce back faster.

The coronavirus has infected more than 10 million people and killed at least 500,000 globally, according to data compiled by Johns Hopkins University. In the Middle East and North African region, Turkey and Iran have been the hardest hit.

While governments were right to inject liquidity initially, the next step needs to be regulatory change. There will need to be a certain kind of support, this cannot be debt, but real financial support for companies that have the resiliency and the ability to make a difference post-Covid, even if the resources are not infinite.

Actually, the World Bank has recommended that countries first address the health emergency and the associated economic contraction, through “prioritizing health spending and providing safety nets for workers in the informal economy.” Then focus on longer-term reforms that provide “greater data transparency and restructuring state-owned companies.”

While globalization was important and “made sense,” economies may now need to become more local and regional.

In such an environment, the UAE’s “friendly business environment” will stand the country in good stead moving forward. Dubai, in particular, will be in a “great place” because such openness is a “rare commodity” in the region and in the rest of the world, said Bejjani. Whatever happens, having a friendly business environment, having the agility to bounce back and having the means in terms of financial solidity, will actually come in handy and will make a big difference going forward.

By Domenico Greco