Shifting sands: Three years of rapid change in the Middle East

Unsplash/Said Alamri

It’s hard to keep up. With the new year announcement of a mandatory employee unemployment insurance scheme, I did a quick tally of new impactful corporate legislation in the UAE over the last 12 months and came to a figure of seven laws and regulations that we’ve all had to understand and adopt.

While this article isn’t about new laws in the UAE (although you could actually write about this every week) it is a simple and obvious manifestation of how fast the business environment is changing in the Middle East. This obviously has a big impact on trade and investment flows in the region.

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Covid has certainly catalysed much of this and the positive legacy is still being seen with various factors coming to the fore: digital-first economies, food security, robust supply chains, quality healthcare – the region has certainly emerged stronger from the pandemic.

Geopolitics is playing a big part, too.

The energy crisis of 2022 has put the Middle East firmly in the strategic spotlight, given the ructions elsewhere in global energy markets, whilst higher prices for oil and gas obviously provide for a major fiscal boon for countries in the region.

Due to its growing strategic importance, the Middle East is also able to stay rigorously unaligned in the emerging US-China cold war, being too important to either side for them to risk the fallout of being forced to pick a side.

With these structural macro tail winds, the situation within the region is becoming even more interesting.

For many years the sleeping giant, Saudi Arabia is now wide awake and making up for lost time, deploying its enormous balance sheet across nationwide giga-projects that are driving economic growth and societal change under the aegis of the Vision 2030 programme.

GDP is forecast to grow by 3 percent in 2023 – although domestic estimates have it as high as 7 percent – making Saudi the undisputed economic engine room in the region.

Its population of 37 million – almost twice the size of the rest of the GCC combined – presents a domestic market of real scale that has been historically underserved.

Although the UAE cannot compete with Saudi in terms of the breadth of opportunities and size of its economy, its regional hub status was further reinforced by rapprochement with Qatar in early 2021.

This followed hard on the heels of the historic Abraham Accords in late 2020, bringing Israel into its orbit – meaning the entire region really can be accessed from the UAE as never before.

The successful delivery of Expo 2020 Dubai burnished its credentials internationally in the immediate rebound from Covid.

Hosting this year’s Cop28, at the same location as Expo, provides another opportunity for a global showcase in an area where the country is making rapid strides towards decarbonisation.

The UAE has made a public commitment to net zero by 2050 based on a progressive energy mix of 44 percent renewables, 38 percent gas, 12 percent clean coal and 6 percent nuclear.

Qatar enters 2023 basking in the afterglow of its own successfully executed mega event. The Fifa World Cup confounded its many critics with its quality delivery.

It will take some time for the legacy of this to be fully evident, but don’t underestimate the impact that having access to six billion pairs of eyes makes for soft power projection and gaining interest from companies around the world.

The smaller nations of the GCC, also buoyed by the same positive dynamics in global energy markets, all continue to develop their own programmes to diversify their economies, increase private sector participation, create new employment opportunities and encourage foreign direct investment.

Kuwait has Vision 2035, Oman is focused on Vision 2040 and Bahrain espouses its own Vision 2030.

All require external investment, expertise and engagement in order to succeed and, while smaller in scale than the programmes elsewhere in the Gulf, they are significant in their own right and present as serious opportunities for foreign companies to participate in.

Looking at this fast changing and ever evolving landscape from elsewhere in the world it can be somewhat mystifying.

For those of us living in the region, it quickly becomes the accepted norm that things will change, and that challenges and opportunities will continue to emerge as a result.

I expect the new laws tally for 2023 to be of a similar magnitude to 2022 and that the year ahead in the Middle East will continue to make for interesting business.

Joe Hepworth is CEO of Dubai-based trade support company British Centres for Business