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Menap countries must work together to close GDP shortfall

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Alain Bejjani has been replaced as CEO at Majid Al Futtaim

Economic cooperation in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) is a strategic must for continued regional prosperity and socio-economic development, says a new report.

The introduction of bloc-wide common standards and free flow of capital, goods and services could help unlock up to US$230 billion in GDP, according to research from UAE retail giant Majid Al Futtaim and the World Economic Forum.

While 8.5 percent of the world’s population lives in the MENAP region, it accounts for just 3.4 percent of global GDP. 

The report, The Time is Now: A Perspective on Economic Integration in MENAP, indicates an incremental $2.5 trillion would need to be generated for the region to produce its representative share of GDP.

“To achieve its potential, economic cooperation within MENAP is imperative. However, the region currently remains a collection of fragmented economies, few of which have the scale, breadth, depth, institutional development, and regulatory environment to be considered attractive markets for investment,” the report notes. 

Alain Bejjani, CEO at Majid Al Futtaim, said the last two years have thrown up “incredible challenges” and shown the global community the values of perseverance. 

Many university students leave to study abroad and, in many cases, do not return to the MENAP region

“In the MENAP region we still face social, economic and geopolitical headwinds. Although the idiosyncrasies of individual markets have seen differing speeds of advancement, what unifies us is the magnitude of our region’s untapped potential,” Bejjani said. 

“Today, as the public and private sectors reimagine their growth trajectories and adapt to reshaped priorities, we have the opportunity to take concrete steps towards closing the gap in potential GDP and elevating MENAP’s contribution to the global economies.”

Set common standards

As a first step, stakeholders must collectively establish the mechanism to drive action and set out common standards, areas of opportunity and focus, Beijani said.

The report highlights the global pandemic, the Ukraine conflict, oil price collapse, global supply shocks, and commodity price volatility as global developments that have catapulted the region into a “new economic reality”. 

The study also recommends the private sector play a more active role in policy dialogue as part of stakeholder capitalism for MENAP to achieve its full potential.

“The economic pressure on MENAP countries for diversification further stipulates urgency for economic integration, with expectations for the reform to impact the region positively. The acceleration in the global energy transition will affect the region more than most, given the traditional reliance of many of its countries on energy exports,” the report said.

Another overarching priority when unlocking the economic potential of MENAP must focus on the development and retention of homegrown talent, it said.

“Nurturing and upskilling future leaders was noted as a critical factor in the region’s progress that represents a crucial pillar for a prosperous economic outlook. While MENAP has 8 percent of total world university students, it has only 1.5 percent of the top 500 universities, leading to many of those able to do so leaving to study abroad and, in many cases, not returning to the region.”