The US stance toward the Middle East and North Africa (MENA), as well as global institutions, is negatively impacting business and regional growth, according to experts at the second International Institute for Strategic Studies (IISS) Bahrain Bay Forum 2017.
A panel, including former Swedish Premier Carl Bildt and former US Deputy Secretary of State Prof. James Steinberg, discussed economic and trade outlooks in the US, UK, EU and key emerging markets amid policy uncertainties.
Prof. Gao Haihong, director of the Research Center for International Finance, and John Knight, executive vice president of Statoil Global Strategy and Business Development, said populist demands for protectionist trade agendas and inward-looking economic policies are driving sweeping political changes across the US and Europe.
These developments, along with regional tensions, are set to reshape the future of trade and have serious implications for the global and regional economic outlooks.
Reforms for sustainability
MENA’s untapped solar power potential is one way the region can diversify away from oil, said experts.
Dr. Nasser Saidi, founder and president of Nasser Saidi & Associates and former Lebanese economy minister, proposed a Marshall Plan and the establishment of a reconstruction and development bank to push regional reforms.
The need for a vibrant private sector that generates jobs is a key element for economic diversification. Youth unemployment should preoccupy MENA policymakers the most, said Saidi.
To meet demand for new jobs and prevent unemployment from rising further, MENA needs at least a 7 percent growth rate. The current figure is not even half of that.
Dr. Aasim Husain, deputy director of the Middle East and Central Asia department at the International Monetary Fund (IMF), said the jobs gap and the need for private sector growth were primary challenges for the Gulf Cooperation Council (GCC). “It’s not a problem of educational spending,” he added.
Financing the transformation
Dr. Hafez Ghanem, vice president of the MENA department at the World Bank, said the economic cost of conflict in the region is not only about damage, but also about difficulty in building institutions.
“For infrastructure projects, the region relies too heavily on public sector funding; the private sector should be used more,” he added.
“One third of global refugees are in the MENA region, according to the World Bank, which means there are huge restructuring costs compounded by low oil prices.”
Khalid Al-Rumaihi, chief executive of the Bahrain Economic Development Board, said the GCC has made vital achievements in increasing foreign direct investment (FDI).
But there is a need to develop more innovative financing solutions, as bond issuance cannot solve GCC funding problems forever, he added.
Regional governments must balance the need to raise funds, service deficits and nurture prosperity, said Al-Rumaihi.
The future of energy
“The culprit is emissions, not hydrocarbons,” said Sheikh Mohammed bin Khalifa Al-Khalifa, Bahrain’s oil minister, at the panel on energy and climate change.
He said he is upbeat on prices, based on the emerging supply gap, inventory drawdowns and forecasts of limited growth.
He warned that the oil industry will face a supply crunch if investment does not increase to match future demand, which is currently being underestimated.
By Baker Atyani
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