June 2023
IMF's perspective on oil, growth and challenges
Exclusive Interview with Jihad Azour, Director ME & CA, International Monetary Fund
Challenging global financial order
Interview with H.E. Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, UAE
By Ahmed Abdelaal, Group CEO, Mashreq
Publisher . JOSEPH CHIDIAC
EDITORIAL
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NOTICE
The alarming statistics recently released by the Institute of International Finance have captured my attention, shedding light on the alarming surge in global debt accumulation during the first quarter of this year. These figures not only serve as a warning of the imminent crisis but also add to the collection of crises that have severely disrupted our lives and economies.
According to the Institute’s data, global debt has skyrocketed by $45 trillion from pre-COVID-19 levels, reaching an unprecedented total of $305 trillion. Of this staggering amount, one-third has been allocated to emerging markets.
The underlying concern stems from the fact that heavily indebted nations, driven to borrow from financial markets due to their inability to service existing debts, may encounter significant challenges in breaking free from the vicious cycle of debt. Their relentless efforts to overcome this predicament may face obstacles, particularly in light of persistently high-interest rates that impede economic recovery. Consequently, the risk of default looms larger, posing a threat to economic stability and impeding progress toward achieving sustainable development goals.
In the private sector, the recent upheaval in the banking
industry has expedited the rise of problematic corporate debt. Stricter credit conditions imposed by banks have presented challenges for companies burdened with substantial debt and limited profitability. Consequently, these companies may struggle to secure debt refinancing, potentially leading them to resort to bankruptcy as a last resort.
Within the Arab region, it is evident that the situation varies across different countries. Oil-importing nations face mounting risks due to the expansion of their debt portfolios and the challenges of financing them at reasonable costs given the prevailing interest rates. On the other hand, oil-producing countries have taken a gradual approach to addressing this issue, prioritizing the diversification of their economies. This diversification effort has played a crucial role in bolstering nonoil revenues and improving their overall financial standing.
Recognizing the gravity of the debt issue, global financial institutions have elevated their concerns to a critical position on their policy agenda, convening extensive meetings to address the matter (which took center stage during the spring meetings). It is expected that the challenges confronting the global economy will require decisive measures from policymakers to assist countries in managing their debt burdens. It is crucial not to postpone addressing this problem to a stage where finding a solution becomes increasingly complex. We vividly recall the far-reaching repercussions of the prolonged European debt crisis that originated in 2009, causing fragmentation across numerous nations.
Chief Executive Officer – Publisher Joe Chidiac
NEOM Green Hydrogen Company (NGHC), a joint venture (JV) between ACWA Power, Air Products, and NEOM, has announced the successful completion of financing agreements for its state-of-the-art green hydrogen production facility. The plant, located in Oxagon within Saudi Arabia’s NEOM region, will represent a significant investment of $8.4 billion.
NGHC has secured financing from a consortium of 23 local, regional, and international banks and investment firms, demonstrating the strong support and confidence in the project.
By 2026, NGHC aims to establish the world’s largest carbonfree green hydrogen plant, capable of producing green
ammonia on a large scale. Air Products has been selected as the contractor and system integrator for the entire facility. Furthermore, NGHC has entered into an exclusive 30-year off-take agreement with Air Products for all the green ammonia generated at the plant.
The project is jointly owned by ACWA Power, Air Products, and NEOM, with each partner having an equal share. The NGHC mega-plant will integrate up to 4GW of solar and wind energy, enabling the production of approximately 600 tonnes per day of carbon-free hydrogen by the end of 2026. This production will primarily be in the form of green ammonia, providing a cost-effective solution for the global transportation and industrial sectors.
Egypt takes significant step toward promoting renewable energy
Egypt and Statkraft AS, a Norwegian company, have recently entered into a Memorandum of Understanding (MoU) to undertake studies on a groundbreaking renewable energy export project from Egypt to Europe via Italy. This collaboration represents a significant milestone in Egypt’s ongoing endeavors to promote renewable energy and establish itself as a prominent participant in the global energy market.
Mohamed Shaker, the Egyptian Minister of Electricity and Renewable Energy, highlighted that this MoU reflects the commitment to bolster and reinforce cooperation
frameworks between Egypt and the European Union. He further emphasized that this agreement marks a significant stride towards fostering collaboration and coordination between the two entities.
Sabah Mashaly, Chairman of the Board of the Egyptian Electricity Transmission Company, elaborated on the details of the memorandum, stating that it involves collaborative efforts to initiate preliminary studies as a precursor to the execution of a project intended to export renewable energy to Europe via Italy. The envisioned project will leverage a sea interconnection with a minimum capacity of 3 gigawatts.
In its pursuit to establish a pivotal role in the energy sector of the Middle East, Egypt has been actively engaging in electrical interconnection projects with its neighboring countries. Notably, Italy, Greece and Cyprus have recently expressed their interest in importing Egypt’s surplus electricity production, estimated to be around 25,000 megawatts. Official data suggests that Egypt’s daily electricity production currently stands at 58,000 megawatts, while its daily consumption is reported to be 33,000 megawatts, according to the Arab News Agency.
S&P expects Dubai's debt to fall amid strong economic growth
Government’s debt stock could fall faster
Standard & Poor’s predicts that Dubai’s government debt burden will decrease to approximately 51 percent of GDP in 2023, down from a peak of 78 percent in 2020.
According to a report by S&P, “The government’s debt stock could fall faster if the reduction in nominal debt, which occurred in 2021 and to a more significant extent in 2022, continues over the coming years.”
This year, Standard & Poor’s expects Dubai’s real GDP to grow by approximately 3 percent, while the UAE-wide structural and social reforms and programs are expected to support long-term growth. “We expect Dubai’s relatively diversified and service-oriented economy to expand by around 3 percent in 2023, slowing from 5 percent in 2022
and 6.2 percent in 2021. In our view, this year will be more reflective of the emirate’s steady economic activity than the years of post-pandemic recovery. We expect strong momentum in the hospitality, real estate, trade, and financial services sectors to continue to support growth,” the report said. Standard & Poor’s estimates Dubai’s GDP per capita to be $34,000 in 2023, which is lower than that of Abu Dhabi due to the latter’s significant wealth derived from the hydrocarbon sector. “We expect GDP growth rates to be largely similar in Dubai and small emirates in 2023, with Abu Dhabi’s growth weakened by the expected decline in hydrocarbon production due to OPEC+ production cuts. In terms of nominal GDP, we estimate that Dubai’s economy is about 3.3 times the size of Sharjah’s and 10.5 times the economy of Ras Al Khaimah.”
Change due to decline in public debt burden, ability to meet financial obligations
Moody’s has upgraded Oman’s credit rating from “Ba3” to “Ba2” and maintained a positive outlook. This upgrade is a result of the decline in public debt burdens and the improvement in the Sultanate’s ability to meet its financial obligations in 2022.
The agency attributed this improvement, along with the increase in public revenues, to “the tangible efforts made by the government in controlling financial conditions, and its decision to direct fiscal surpluses toward reducing public debt, noting the improvement in the effectiveness of fiscal policy and the efficiency of financial governance.”
The International Monetary Fund predicts that the Sultanate
of Oman will achieve the highest economic growth rate among Arab countries next year, projected at 5.2 percent. Furthermore, the World Bank forecasts that Oman will have the fastest-growing economy in the GCC in 2023, with a growth rate expected to reach 4.3 percent.
The World Bank highlights the government’s budget reform and debt reduction efforts, aiming to decrease total debt to 40 percent of GDP in 2022 from around 60 percent in 2021. These efforts have contributed to Oman’s positive outlook.
Data released in May revealed that Oman recorded a budget surplus of $1.2 billion in the first quarter. This surplus was driven by a 9 percent increase in net oil revenues, resulting from higher oil prices and production.
“Government efforts have had a tangible impact on maximizing fiscal surpluses, and more than 15 percent of total public debt declined during 2022, down from 68 percent in 2020 to 40 percent in 2022 as a percentage of GDP,” Moody’s said in its report.
First global payments platform Checkout.com granted CBUAE acquiring license
License unlocks provider’s full payments model for merchants in UAE
Renowned global payments service provider Checkout. com has achieved a significant milestone by obtaining a Retail Payment Services license from the Central Bank of the United Arab Emirates (CBUAE). This notable accomplishment solidifies Checkout.com as the first global payments provider to receive an acquiring license in the country, reinforcing its prominent position as a leader in the MENA region. Securing this acquiring license empowers Checkout.com to fully unleash its comprehensive offerings for merchants in the UAE. It encompasses a range of merchant-acquiring solutions, payment aggregation services, and efficient cross-
border fund transfers. By directly acquiring transactions, Checkout.com gains enhanced control over processing outcomes, enabling them to deliver exceptional payment acceptance performance, setting a benchmark for industry standards.
Guillaume Pousaz, the CEO and founder of Checkout.com, expressed his appreciation, saying: “The issuance of this license shows the level of trust, commitment, and strength of the relationship we continue to have in serving both domestic and international brands to expand in the UAE.”
The eCommerce sector in the UAE is projected to experience a Compound Annual Growth Rate (CAGR) of 11%, propelling the market size to a staggering $17 billion by 2025. This substantial growth is primarily driven by the shifting preferences of consumers, with 91% of individuals in the UAE now favoring online purchases. Checkout.com has already established partnerships with prominent local brands such as Shahid, Qlub, Carrefour, The Entertainer, Namshi, Mamo, MakeMyTrip, Cafu and Washmen, underscoring their commitment to supporting the country’s business landscape.
Vision 2030 targets $24 billion film industry for Saudi economy
The Saudi Cultural Fund has recently signed a preliminary agreement with the Middle East Financial Investment Company (MEFIC) and Roaa Media Ventures to establish a groundbreaking investment fund in the film sector. The fund is valued at SAR 375 million (approximately $100 million). Under this agreement, the Cultural Fund plans to contribute 40 percent of the total amount through a SAR 300 million investment program, which was launched during the prestigious Cannes Festival. This initiative is part of the IGNITE government’s digital content program and aims to provide financial support to the film sector.
Saudi Arabia has ambitious goals for its film industry. By 2030, the country hopes to surpass annual box office revenues of $1 billion, increase local production to 70 films per year, and expand the number of cinemas to 350 with 2,500 screens. The film industry is projected to contribute around $24 billion to the economy and generate over 30,000 permanent jobs. The primary objective of the newly established fund is to invest in film sector companies and projects, as well as provide necessary financing. Additionally, the fund aims to develop a network of entrepreneurs and distribution experts to support these companies, while effectively managing investment portfolio risks in the sector. The statement also highlights the fund’s intention to collaborate with both local and international investors, attracting foreign expertise to transform Saudi Arabia into a prominent hub for film-making.
Notably, the Saudi film sector financing initiative boasts the highest budget allocation among all artistic and cultural initiatives in the Kingdom, amounting to SAR 879 million. Some 30 percent of this budget has been allocated to the establishment of companies and facilities that support the film sector, while the remaining 70 percent will be directed toward developing, producing, and distributing film content.
A delegation from the European Commission in Cairo has announced that the European Union and the French Development Agency (AFD) will provide Egypt with facilities valued at 60 million euros ($66 million) to enhance the storage capacity of grain silos. An official from the delegation conveyed through an email that the funding is intended to augment the storage capacity by a minimum of 420,000 tons, primarily allocated to wheat and potentially other grains. This allocation signifies a 12 percent increase in Egypt’s existing wheat storage capacity, which currently stands at around 3.5 million tons. The financial support forms part of a broader aid
package previously unveiled to bolster food security in the Middle East and North Africa region, which has been affected by the Russian invasion of Ukraine. The total value of the package is 225 million euros ($240.71 million), with Egypt slated to receive 100 million euros of the overall sum. In March, the Italian Agency for Development Cooperation (AICS) and the EU signed a 40 million euro agreement for funding projects related to grain and seed production, silo construction and wheat transportation management in Egypt.
Prior to the implementation of the national silos project, Egypt incurred annual losses of approximately 10 billion Egyptian pounds (equivalent to $640 million) due to significant wheat losses.
Founders hub, other Microsoft learning tools to be made accessible to Qatari entrepreneurs
Qatar Development Bank has formed a strategic alliance with Microsoft to empower entrepreneurs and innovators in Qatar with an extensive array of technologies and resources to enhance their success. The primary objective of this collaboration is to expedite the digital transformation of start-ups and small and medium enterprises, foster innovation, and solidify Qatar’s position as a prominent regional innovation and technology hub. As part of the partnership, SMEs will have the opportunity to leverage Microsoft Cloud, enabling them to enhance
performance, increase productivity, reduce costs, and cultivate ground-breaking solutions using cutting-edge technologies. Additionally, entrepreneurs and employees can acquire valuable digital skills through the Microsoft Learn platform, equipping them with the necessary expertise to accelerate digital transformation and achieve growth within a knowledgebased economy.
To further support QDB’s start-ups, Microsoft’s Founders Hub platform will be made accessible, serving as a comprehensive resource that amalgamates people, knowledge, and technology to assist founders in overcoming challenges at every stage of their entrepreneurial journey. By harnessing Microsoft’s learning tools, entrepreneurs and start-ups can effectively utilize cloud technology, including artificial intelligence, data analytics, and the Internet of Things, to launch and thrive in a successful business venture.
Mr. Abdulrahman Hesham Al Sowaidi, acting CEO of QDB, expressed his views on the partnership, emphasizing the provision of an advanced set of digital platforms and ensuring that innovators and startups are well-prepared to pursue their aspirations. For her part, Lana Khalaf, general manager of Microsoft Qatar, said, “Start-ups and SMEs play a pivotal role in accelerating Qatar’s digital economy and its position as an innovation hub for investment.”
IMF's perspective on oil, growth and challenges in MENA's economic landscape
Jihad Azour’s insights on economic reforms, inflation and climate change initiatives
Jihad Azour, Director of the Middle East and Central Asia Department, International Monetary Fund
Despite a series of shocks, the economies of the Middle East and North Africa, including the GCC, proved resilient in 2022. However, this year and next, growth is expected to slow reflecting tight policies to restore macroeconomic stability, agreed OPEC+ oil production cuts, and the fallout from the recent deterioration in financial conditions. The outlook depends on external and global factors. Amid continued uncertainty, policy tradeoffs remain complex, and striking the right policy balance will be critical. Oil exporters should carefully manage oil revenues, avoid expanding current expenditures, improve budget transparency, and strengthen mediumterm fiscal frameworks.
“Given the importance of oil production to the economies of the Gulf Cooperation Council countries, the OPEC+ cuts will affect overall growth,” says Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund, in an exclusive interview with “Economy Middle East.” Oil will remain the primary driver of economic activity for the GCC in 2023 and 2024, with an average annual growth rate of around 4.0 percent.
Azour emphasized that oil contributes to more than two-thirds of the total growth in the GCC countries.
The significance of oil production extends beyond the GCC countries, affecting the entire MENA region. As the IMF revises its economic prospects for MENA countries, it becomes crucial to understand the challenges and opportunities faced by these nations in light of the evolving global economic landscape.
In this article, we delve with Jihad Azour into issues that influence the outlook for MENA, including insights on the impact of oil production cuts, the key economic and financial challenges facing countries in the region, and policy recommendations that help address them. We will explore the importance of holding the largest economic gathering – the IMF and World Bank Annual meetings – in Morocco in October this year, as well as the IMF’s role in the upcoming COP28 conference. By understanding these factors, we can gain valuable insights into the path toward economic recovery and resilience for the MENA region.
The International Monetary Fund has recently revised its economic prospects for MENA countries, reflecting the impact of tightening policies and reduced oil production, among other issues. In its latest April report, the IMF lowered its forecast for economic growth in the region by 0.1 percent for 2023 and 2024 compared to its previous estimates in January. It now expects the growth rate to reach 3.1 percent and 3.4 percent, respectively, down from 5.3 percent in 2022.
“Our revisions reflect the impact of tighter monetary and fiscal policies. While these policies were critical in safeguarding macroeconomic stability, they are expected to dampen domestic demand in the region’s emerging market economies. At the same time, the growth slowdown in oil exporters reflects lower oil production in line with the October OPEC+ agreement,” Azour said.
Looking specifically at the Gulf Cooperation Council countries, the IMF forecasts a real annual GDP growth of 2.9 percent by 2023. “Given the importance of oil production for the GCC economies, OPEC+ cuts will weigh on overall growth. Going forward, however, we expect that non-oil growth will be the main driver of economic activity in 2023 and 2024 at about 4.0 percent annual growth on average, and contribute more than two-thirds of these countries’ total growth,” Azour added. This positive momentum is driven by retail and services sectors, as well as rapid private investment growth.
The impact of reduced oil production in the GCC countries extends beyond their borders, affecting the rest of the MENA region. According to Azour, lower growth in the GCC countries can lead to reduced trade and remittances, which could weigh on the economic growth of other countries in the region. On the flip side, lower oil prices resulting from the current futures curves may help alleviate energy costs for oil-importing countries in the MENA region.
MENA countries face multiple challenges and risks in 2023/24, which require strategic measures to mitigate their impact. One of the primary challenges is addressing inflation. According to Azour, it is crucial for authorities, particularly in countries where inflation is high, to adopt a tight monetary approach to rein in inflation. “This will imply further tightening for countries where the current monetary stance is loose. For countries where headline inflation has peaked, and the monetary stance is tight, central banks should be cautious to avoid premature loosening until there are clear signs that core inflation is on a downward trajectory,” he said.
Another significant challenge is ensuring financial sustainability in a global environment of high-interest rates. MENA countries are encouraged to intensify their efforts to preserve fiscal sustainability. This requires implementing tight fiscal policies that support the fight against inflation and mitigate debt sustainability risks. Authorities should focus on prudent fiscal management, such as avoiding the expansion of current expenditures, improving budget transparency, and exploring mediumterm fiscal frameworks with risk management strategies,
"MENA countries need to intensify their efforts to preserve fiscal sustainability."
including greater transparency and accountability. Accelerating reforms is essential to enhance growth potential and strengthen resilience against recurring shocks. Policymakers should prioritize implementing reforms at an accelerated pace, aiming to promote structural transformation, foster private sector development, and increase access to opportunities for the population. “In practical terms, the authorities should consider a wide range of reforms to promote the structural transformation of their economies. These reforms range from fostering private sector development including downsizing the state footprint in the economy as to attract investment, to medium term fiscal frameworks that adopt risk management strategies including greater transparency and accountability,” Azour said. Global financial conditions pose a potential risk to debt sustainability in the region. A further tightening of global financial conditions could prompt investors to reassess the sustainability of high debt levels in certain countries. This could lead to increased fiscal pressures and hinder private sector investment and growth. According to Azour, to mitigate this risk, MENA countries should focus on implementing consistent and sound macroeconomic policies that preserve fiscal sustainability and price stability. Additionally, structural reforms that accelerate the transformation and inclusion of their economies can help enhance resilience and mitigate the potential negative consequences of tightening global financial conditions.
The banking sector turmoil has been a significant concern, and the IMF has assessed its implications for the MENA region. Despite the challenges posed by the COVID-19 pandemic, the banking sectors in the region have shown resilience, thanks to supportive measures and diligent supervision. However, it is crucial for authorities to maintain a high level of vigilance and closely monitor the situation. Vigilant supervision remains essential in the face of potential risks that could arise from the banking sector crisis. There is a need for supervisors to remain watchful, particularly considering the possibility of renewed global banking pressures that could affect the region. These pressures, if not properly managed, may undermine the ability of banks to provide sufficient credit to the economy, thus weakening growth prospects. The contraction of credit is a potential risk that needs to be carefully addressed. If banks face significant pressures that constrain their lending capacity, it can have adverse implications for economic activity and investment. Therefore, proactive measures by authorities are essential to ensure that the banking sector crisis does not lead to a credit contraction that hampers growth.
Authorities should consider implementing measures that provide support to banks, such as capital injections or liquidity support, if needed. This will help maintain the
stability of the financial system and ensure that banks can continue to play their crucial role in providing credit to the economy.
Moreover, proactive measures by authorities are required to address the challenges and vulnerabilities in the banking sector. This may involve implementing reforms to strengthen the resilience of banks, enhance risk management practices, and improve governance and transparency. It is important for policymakers to prioritize the stability and soundness of the banking sector to sustain economic growth and mitigate the potential adverse effects of the crisis.
The Annual Meetings of the IMF and the World Bank in Marrakech in October this year present an opportune platform for global leaders and policymakers to come together and address the pressing economic challenges facing the MENA region and the world. These meetings serve as a crucial forum for discussions, knowledge sharing, and coordination of efforts to promote global economic stability and sustainable development. Global cooperation plays a pivotal role in addressing economic challenges effectively. The interconnectedness of economies means that no country or region can tackle these challenges in isolation. Cooperation among nations, international organizations, and financial institutions like the IMF is essential to pool resources, share expertise, and coordinate policy actions.
The proposed themes for the Annual Meetings emphasize the need to build resilience, promote structural transformation, and foster global cooperation, Azour said. These themes reflect the recognition that addressing economic challenges requires a multifaceted approach that combines short-term measures to tackle immediate crises with long-term strategies for sustainable growth.
Building resilience is crucial in the face of ongoing uncertainties and potential shocks. The IMF advocates for policies and measures that strengthen countries’ ability to withstand economic disruptions, including enhancing fiscal and monetary frameworks, improving financial
"Vigilant supervision remains essential in the face of potential risks that could arise from the banking sector crisis."
sector resilience and implementing social safety nets. By building resilience, countries can better navigate economic challenges and minimize their adverse impact on growth and development.
Promoting structural transformation is another key aspect emphasized by the IMF. Structural reforms that enhance productivity, foster innovation, and diversify economies are vital for long-term sustainable growth. The IMF encourages countries in the MENA region to undertake reforms that improve the business environment, enhance labor market flexibility, and invest in education and skills development. These reforms can help unlock the region’s potential and create opportunities for inclusive and sustainable economic growth.
In terms of policy recommendations, the IMF encourages countries in the MENA region to prioritize structural reforms, invest in human capital, and enhance governance and transparency. These measures can promote economic diversification, attract investment, and create an enabling environment for private sector development. The IMF also emphasizes the importance of inclusive growth and social protection measures to ensure that the benefits of economic development are shared equitably.
“The IMF remains a steadfast partner of MENA countries through policy advice, financing, and capacity development. On policy advice, we are engaging very closely with country authorities in our role as trusted and confidential advisors, in line with our mandate to foster global macroeconomic and financial stability, through sound policymaking,” Azour said.
“We have also been very active in providing financial support. Since January 2020, the IMF has approved $25 billion of new financing for MENA countries, including recent programs for Egypt, Mauritania and Morocco. This is in addition to the 2021 SDR allocation which increased MENA’s reserves by over $42 billion,” he added.
“Lastly, to help countries face emerging challenges, our capacity development has been strengthened, with increased presence on the ground in Beirut, Kuwait City, and a new regional office in Riyadh that will be opened later this year.”
The IMF has placed a significant emphasis on climaterelated issues and has forged a strategic partnership with the United Arab Emirates (UAE) in preparation for COP28, the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). This partnership highlights the IMF’s commitment to supporting global efforts in addressing climate change and its recognition of the UAE’s leadership in promoting sustainability. As part of its contribution to COP28, the IMF plays a crucial role in providing analytical support and evaluating progress in achieving climate goals. Its expertise in macroeconomic analysis and policy advice allows it to assess the economic implications of climate change and the transition to a low-carbon economy. Through its research and analysis, the IMF helps policymakers understand the potential risks and opportunities associated with climate change and develop strategies for a sustainable and resilient future. One of the key initiatives of the IMF in supporting countries’ efforts to address climate change is the establishment of the Resilience and Sustainability Facility. This facility aims to provide financial and technical assistance to member countries in implementing policy reforms and investments for climate change mitigation and adaptation. The facility supports countries in designing and implementing climate-related policies, such as carbon pricing mechanisms, renewable energy transition plans, and climate resilience strategies. According to Azour, the Resilience and Sustainability Facility also assists countries in mobilizing and leveraging additional sources of climate finance, including public and private sector funding. By helping countries access financial resources, the IMF contributes to the scaling up of climate investments, particularly in vulnerable and developing economies. The facility works in close collaboration with other international organizations, development banks, and stakeholders to ensure coordinated support and maximize the impact of climate-related initiatives. Through its strategic partnership with the UAE for COP28, the IMF aims to strengthen the global response to climate change by promoting dialogue, knowledge sharing, and capacity building. The partnership facilitates the exchange of best practices, lessons learned, and innovative approaches to climate action. By leveraging the UAE’s expertise and experience in sustainable development, the IMF can enhance its analytical work and policy advice in the context of climate change.
"Global cooperation plays a pivotal role in addressing economic challenges effectively."
The UAE economy remains robust, surpassing expectations as the World Bank projects a remarkable growth rate of 4.1 percent this year, even amid challenging business conditions in key global markets. In this interview with His Excellency Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, Economy Middle East looks at the Ministry’s latest initiatives aimed at maintaining the UAE’s competitive edge, sustaining its momentum toward sustainable growth, and actively contributing to the fulfilment of the nation’s development goals and aspirations.
The World Bank estimates a 4.1 percent growth for the UAE economy this year. Do you share a similar outlook, or do you think a better performance can be achieved?
The UAE enjoys a positive economic outlook, as evidenced by a strong and growing economy with low unemployment levels, increasing wages, and increasing business activity. Our economy reflected a strong performance in the oil and nonoil sectors in 2022, as it expanded by 7.6 percent.
For 2023, the Central Bank of the UAE projects a growth rate of 3.9 percent for the country’s economy. This includes an estimated growth of 4.2 percent in non-oil GDP and 3 percent in oil GDP, considering the anticipated decrease in oil production in line with the OPEC+ agreements. However, there is always uncertainty when it comes to economic projections, due to the complexity of the systems involved and the challenges in accurately predicting them. Various factors, such as international financial conditions
and the state of the global supply chain, can potentially impact these projections. UAE firms continue to show forward-looking expectations, as reflected by the increase of the Composite Business Confidence Index (BCI) (Northern Emirates) from 109.8 points in Q3 of 2022 to 119.4 points in Q4 of 2022.
Domestic consumption, one of the determinants of the growth and success of the economy, demonstrated remarkable performance in the fourth quarter of 2022. This impressive outcome was fueled by a substantial surge in employment rates, with the three-month moving average of individuals employed in the UAE and private sector wages experiencing a double-digit year-on-year increase, surpassing their pre-pandemic levels.
The UAE has always been a top destination for foreign direct investment and expatriate talent. Will the 9 percent corporate tax to be applied beginning June 2023 have an impact?
Given the UAE’s status as a prominent international business and financial hub, the implementation of a comprehensive corporate income tax system would enhance the ease of conducting international business for UAE companies.
By introducing a corporate tax regime in the UAE that adheres to the latest international tax practices, businesses would be safeguarded against punitive taxation in foreign countries
and ensure they receive relief from foreign taxation under double taxation agreements. This would contribute to attracting more businesses to the UAE, thanks to its secure and internationally compliant business environment. The UAE government is fully dedicated to establishing a tax regime that includes the introduction of a Corporate Tax system. This commitment reaffirms the UAE’s resolve to uphold international standards for tax transparency and prevent harmful tax practices.
Let’s begin by discussing the importance of Avoidance of Double Taxation Agreements. Some countries impose taxes of the same nature on the same individual and goods, resulting in double taxation. This practice has had detrimental effects on the exchange of goods, services, and international mutual investments. The UAE recognizes the importance of eliminating double taxation. Consequently, the Ministry of Finance has diligently followed international standards set forth by the G20 and the Organization for Economic Cooperation and Development. These standards address harmful practices, as well as the exchange of information and the misuse of agreements to gain advantages for third parties or to establish non-economic entities within the state.
In line with this commitment, Cabinet Resolution No. 3/196 of 1989 was enacted, empowering the Ministry of Finance to engage in negotiations and sign comprehensive bilateral agreements aimed at avoiding double taxation. As of now, the UAE has successfully concluded 142 such agreements.
Double taxation avoidance agreements serve multiple purposes in the UAE. They promote development goals, diversify national income sources, and eliminate instances of
double taxation, including additional and indirect taxes, as well as fiscal evasion. These agreements address challenges related to cross-border trade and investment, offering comprehensive protection against direct and indirect forms of double taxation. Their objective is to facilitate free trade and investment flow, attract larger investments, and support development goals while considering evolving the global economy, financial sectors, and new financial instruments like transfer pricing mechanisms. Additionally, these agreements encourage the exchange of goods, services, and capital movements. Secondly, the Protection and Promotion of Investment Agreements are aligned with the UAE’s efforts to strengthen its global standing by showcasing the favorable investment environment available within the UAE at local, regional, and international levels. Consistent with our wise leadership’s vision to foster sustainable development and establish an investment ecosystem that appeals to both the public and private sectors, these agreements also seek to fortify relationships and cultivate strategic alliances with Arab and foreign nations.
The Cabinet Resolution No. 382/1 of 1989 was issued to authorize the Ministry of Finance to negotiate and sign bilateral agreements with Arab and foreign countries to safeguard and promote investments. To date, a total of 110 agreements have been reached, all aimed at shielding investments from non-commercial risks such as nationalization, expropriation, sequestration, and freezing. They facilitate the establishment and licensing of investments, guarantee the unrestricted transfer of profits and other returns in a freely convertible currency, ensure equal treatment as per the laws enforced in the host country, and extend the most favored national treatment concerning the management, maintenance, and expansion of investments.
The agreements ensure fair and prompt compensation to the investor in the event of expropriation of their investment for the public interest,
in accordance with the law and without any discrimination This compensation should correspond to the fair market value of the investment prior to the expropriation. Furthermore, these agreements establish the procedures for resolving disputes between the investor and the State, allowing for amicable solutions, recourse to local courts, or resorting to international arbitration.
What steps has the Ministry of Finance taken to secure green financing instruments and are there measures to motivate investors to adopt this type of financing?
The UAE was the first Gulf country to commit to net-zero emissions. In 2021, the UAE launched its Net Zero 2050 Strategic Initiative, which aims to promote investments in clean and renewable energy sources to achieve net-zero by 2050. Our commitment to net neutrality entails the provision of climate finance, building on an effective sustainable finance ecosystem in the UAE. On that note, the UAE has experienced remarkable growth in the issuance of green and sustainable finance in the past couple of years. The UAE’s ESG bonds market for green sukuk, bonds and loans is also thriving, with a valuation that nearly reached $17 billion in 2021.
The Ministry of Finance plays a central role in shaping the sustainable finance landscape in the UAE. Internationally, the ministry is leading the UAE’s contribution to global sustainable finance policy discussions through G20 and other global multilateral forums. On a local level, the ministry is participating in the UAE Sustainable Finance Working Group, which aims to develop the local sustainable finance ecosystem. The group is also developing a UAE Sustainable Finance governance model, as well as disclosure requirements and taxonomy. Additionally, we are working closely with the UAE COP28 Team to explore climate finance opportunities and challenges in order to inform them of local and international efforts and objectives in this regard.
Innovation is a valued practice in the UAE, and highly encouraged by its leaders. Can you share the latest innovation initiatives of the Ministry of Finance?
Innovation is deeply ingrained in the UAE’s DNA, and as the Ministry of Finance, we are committed to continuously fostering a culture of innovation within our organizational work environment. Over the past decades, our ministry has successfully embraced a fully digitalized approach to providing services, adhering to the highest international standards. This reaffirms our position as a global leader in government financial work and contributes to elevating the customer experience while driving economic development in the UAE.
To further enhance accessibility to our services, we have introduced the Digital Service Guide – a user-friendly and interactive digital platform. Its purpose is to simplify the process of accessing information, submitting applications and obtaining services for individuals and businesses. Moreover, the Mohammed bin Rashid Innovation Fund is a groundbreaking initiative by the Ministry of Finance, launched under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. MBRIF aims to empower the innovation ecosystem and support innovators in making a positive impact on the UAE’s transition to a knowledgebased economy. Through this initiative, we aspire to achieve prosperity and sustainability for our nation. MBRIF has meticulously developed two comprehensive programs tailored to meet the unique needs of every innovator, with the invaluable support of our like-minded network of partners.
What are the ministry’s plans to support entrepreneurs, as well as startups and small businesses?
Supporting the growth of SMEs is a priority for the Ministry of Finance. The thriving SME sector in the UAE plays a vital role in driving sustainable development, unlocking the economy’s potential, and fostering growth, diversity, flexibility and innovation.
In line with our mission to make the UAE a global business hub and a promising destination for SMEs, the Ministry of Finance introduced advanced digital solutions to create a business-friendly and encouraging environment for business owners and entrepreneurs. Furthermore, we offer various forms of sponsorship that cover all stages of establishing and developing thriving businesses and promising projects. The ministry extends support and sponsorship for innovative businesses and entrepreneurs, offering modern environment, transparent procedures, smart services, digital platforms, open data and futuristic models.
SME owners and entrepreneurs can also register their companies in the
Federal Supplier Register to apply for all government bids and tenders proposed by federal government entities. Moreover, in line with our mission to foster an innovationdriven environment and shape the future of the UAE economy, we facilitate affordable financing and streamlined loan processes through government-backed guarantees for unique and innovative ideas from companies and SMEs.
We also provide incentive packages for companies that include a 50 percent discount on first-time registration in the Federal Supplier Register, free registration renewals, exemption of SMEs from registration fees for the first two years from the establishment date, a 10 percent price preference to SMEs and a free tender booklet.
In addition to a 0 percent Corporate Tax rate for taxable income up to and including AED375,000, small businesses with revenue below a certain threshold can claim “small business relief,” allowing them to be treated as having no taxable income during the relevant
Tax Period. They may also be subject to simplified compliance obligations. To claim small business relief, a formal election must be made to the FTA.
Recently, the Ministry of Finance issued Ministerial Decision No. 73 of 2023 on “Small Business Relief,” aimed at supporting startups and other small or micro businesses by reducing their Corporate Tax burden and compliance costs. This decision specifies the revenue threshold and conditions for eligible taxable persons to elect for small business relief. It also provides clarity on the treatment of carriedforward Tax Losses and disallows Net Interest Expenditure under the “Small Business Relief’ scheme.
According to the Ministerial Decision on “Small Business Relief,” resident taxable persons can claim this relief if their revenue in the relevant tax period and previous tax periods is below AED3 million for each tax period. However, once a taxable person exceeds the AED3 million revenue threshold in any tax period, the “Small Business Relief” will no longer be available.
By Ahmed Abdelaal
The MENA region is particularly vulnerable to the adverse effects of climate change due to various geographical factors, making it one of the most severely affected regions. This reality has created a sense of urgency for economic change in most countries across the region, especially as GCC nations make substantial progress in building resilient and sustainable non-oil economies. In this changing paradigm, new opportunities are surfacing for investors and financial institutions across a diverse range of industries, including renewable energy, infrastructure development, digital technologies, e-commerce, and fintech. This may be a vast spectrum of sectors, but what they all have in common is the increasing influence of sustainable finance.
The concept of responsible business has rapidly gained recognition in the public consciousness as an essential corporate requirement. This is evident in the promising outlook for sustainable financing. Moreover, within the framework of addressing
climate change, sustainable financing has emerged as a crucial factor in meeting consumer preferences. Supported by regulatory initiatives, this has given rise to a new paradigm where the most viable investments are those aligned with environmental, social, and governance (ESG) principles. Consequently, consumers now possess the power to enact change through their choices. As a result, the emergence of ESG investing has rapidly changed how investors think and the associated choices they make. In particular, the ESG spotlight has led to an emphasis on the importance of investment decisions that mitigate exposure to climate risk, comply with current and future regulations and limit any potential reputational damage. This is why banks and investment firms are devising green and sustainable strategies, incorporating them into their business strategies, and aligning their funding mechanisms to their sustainable development commitments.
We are witnessing the positive impact of these mechanisms as they drive successful outcomes, thanks in part to their inclusion of long-term agreements. Mashreq has played a pivotal role in expediting the uptake of sustainable financing opportunities, facilitating a total of $15.5 billion in investments in sustainable finance and adaptation across Egypt, India, Bahrain, Qatar and the UAE over the past two years. Several of these nations are furthering their commitment to sustainability by actively promoting the issuance of green bonds and Sukuk.
Egypt was the first country to issue a sovereign green bond in MENA in 2020, issuing $750 million worth of five-year bonds. The sovereign green bond was seven times oversubscribed, leading to a 50 percent upsizing of the transaction to its $750 million ultimate issuance level. The investor response presents a glimpse into the opportunity and appetite for green financing in the MENA region, as well as an insight into how seriously investors are focusing on the social and economic threats from climate change.
Additionally, and in a nod to the worsening issue of water security, Mashreq has also facilitated $1.3 billion in water-related projects across Egypt, India, Bahrain, Qatar and the UAE that will build resilience to scarcity and water-scarcity-related disasters. As part of these efforts, the bank has been heavily involved in financing solutions for projects like the Abu Rawash Wastewater Treatment Plant in Egypt, among many other water-related programs.
This investment is set to have a significant impact, benefiting over 8 million individuals, primarily in the Giza Governorate, the Eastern side of the Nile River and the CairoAlexandria Desert Road. Additionally, the project has successfully created 1,600 employment opportunities, with 20 percent allocated for women, contributing to a broader positive social effect. Mashreq has also played
a leading role in facilitating the Sustainability Linked Loan for Nogaholding in Bahrain, an impressive achievement considering its substantial value of $2.2 billion, making it the largest SLL in the region. Looking ahead, Mashreq’s vision is highly ambitious, aiming to achieve $30 billion in sustainable financing by 2030.
However, such financing targets are only part of the picture. To further boost its impact, the banking sector must partner closely with its clients, advising them on transition strategies, managing risk and helping them access appropriate sustainable financing for their needs – across CAPEX, OPEX or even retraining their workforce and raising awareness among employees. Partnerships with policymakers have also become important, not only regionally but at a global level. This year’s COP28 in the UAE – following COP27 in Egypt in 2022 – will provide a new opportunity for governments as well as the public and private sectors to collaborate to streamline details on national and regional finance frameworks, and work together to accelerate adoption of sustainable finance. This will help boost clarity, which is integral to strengthening investors’ appetites and confidence. Looking ahead, all banks have a responsibility to build their sustainable financing solutions within the context of national, regional and international regulations, standards and policies. Across the MENA region, it is crucial for the banking sector to prioritize alignment with national and regional frameworks, including the UAE’s climate goals, along with global environmental initiatives. This imperative goes beyond financial considerations and extends to a moral and ethical responsibility.
April 2023 saw Mashreq join the World Green Building Council’s Advancing
Net Zero Readiness Framework as a Collaborator in the MENA region, following the bank’s decision to join the United Nations Global Compact initiative in August 2022. Through its involvement with both institutions, Mashreq looks to further incorporate the principles of social and environmental responsibility, integrity, transparency and robust social and governance practices across its operations and activities.
All corporations in the financial industry have a fundamental responsibility to act as corporate citizens and lead by example. With COP28 on the horizon, now more than ever – and particularly in the UAE – a firm commitment to ESG principles will provide leading banks with a competitive advantage and set them apart from their fellow industry players. This unique positioning becomes pivotal for the banking sector’s goal of fostering sustainable business practices and driving the adoption of sustainable financing. By doing so, these leading banks will be at the forefront, facilitating the rapid adoption of sustainable finance and paving the way for its accelerated growth.
Exness, a global brokerage firm, concluded 2022 impressively, recording a monthly trading volume of $2.5 trillion in December. The positive momentum continued into 2023, with company’s monthly trading volumes surpassing $2.8 trillion. Last March, trading volumes soared to an impressive $3.8 trillion. Additionally, Exness experienced a significant surge in active clients, reaching nearly 375,000, as indicated by their financial data.
Damian Bunce, the chief customer officer at Exness, told Economy Middle East that the exceptional performance can be attributed to a combination of factors. Bunce highlighted their effective distribution model, which enables them to enter new markets
strategically, identify suitable partners, and successfully promote their products and services. “We’re a company of 2,000 people and 800 of those are working in technology and data science, allowing us to avail very big volumes and build excellent products that are highly price competitive,” he said.
Bunce emphasized that once clients engage in trading with Exness products, the company ensures these traders have the assurance that in the event of any incidents or issues arising, these are promptly addressed and resolved. “So, when you combine distribution, product and service, you have a compelling proposition with Exness,” Bunce said.
CFDs, also known as contracts for differences, are financial instruments that allow clients to adopt either a long or short position, i.e. profit from both upward and downward market movements. One of the key advantages of CFDs is that they provide traders with leverage, granting them the ability to borrow funds from brokers to engage in more substantial contracts, such as those involving gold and oil.
“CFDs have become popular because of the functionality they offer in a big industry that has roughly 1 trillion in traded volume per day for retail alone. But education around leverage is really crucial,” Bunce cautioned. Leverage does have the benefit of providing upside opportunity. “For less money, you can buy something pricier. But the downside of course is that you can lose your money quickly, including all your deposits. So, it’s important to be measured about not overleveraging.” Bunce
Bunce elaborated on one of Exness’ popular products, which addresses a common industry paint point known as “Slippage.” This occurs when a client specifies a trade price that is ultimately not fulfilled due to market movements, also referred to as “gapping.” Bunce clarified that the responsibility for slippage lies not with the broker but rather with the market itself.
To alleviate this concern, Exness provides a feature called “gap level protection,” which has garnered significant appeal among customers, especially in volatile markets. In certain instances, brokers may choose to widen spreads, this is usually a risk management measure to protect the broker and historically it has the negative side effect of liquidating some clients’ leveraged positions.
“At Exness this can never happen. Clients’ positions are never liquidated as a result of spread widening - this was a very deliberate measure introduced as part of Exness’ unique advantages and is referred to as
volatility protection. With clients that trade with leverage, they can get upside and never lose more than their initial deposit and so, there’s never a situation where a trading customer of Exness could effectively “owe” Exness money as a consequence of us liquidating a leveraged position which would have made the client balances negative. That negative is always Exness liability.”
Exness invests heavily in having a robust presence in many regional conferences. “We usually have the largest stand. We do that because people want to see their counterparts, and want to know we are real, big and well capitalized,” Bunce said. In terms of regulatory matters, Exness acquired a brokerage company in Jordan, obtaining its first license in the country. Recognizing the immense opportunities available in the area, Bunce emphasized that Exness is actively engaged in ongoing discussions with local regulators to determine the most suitable operational structure for the region.
Upcoming market themes
According to Bunce, today presents a remarkable opportunity for trading, with numerous possibilities available, although he cautioned that some opportunities come with inherent risks. One significant concern he highlighted is the unresolved issue of the debt ceiling within the US Congress. If this matter is not resolved in a timely manner, it could have catastrophic consequences for the market, particularly regarding defaults on US debt. Bunce added that any financial instrument linked to the dollar would likely be impacted if such a scenario were to unfold. He provided an example from the past 6 to 12 months involving the Japanese yen. As the U.S. Federal Reserve raised interest rates to combat inflation while the Bank of Japan maintained stability, the yen weakened against the dollar. This, in turn, created extensive trading opportunities.
Bunce explained that the narrative surrounding the strengthening of the dollar is expected to remain a significant
theme in the future. He also pointed to the issue of de-dollarization some countries are resorting to but said that this scenario playing out over the next 12 months was highly unlikely.
According to Bunce, the potential shift of Saudi Arabia considering accepting oil payments in yuan, in addition to or instead of the dollar, represents a significant market-making move.
“And then there are themes around cryptocurrencies. We’ve seen the Bitcoin Summer, and Winter, and now maybe we’re in Spring. Bitcoin provides many traders with relatively interesting alternatives to traditional assets. With daily trading at roughly $68 billion, Bitcoin is a pretty relevant asset today.”
Bunce also noted gold as being another market theme. “Exness is a very big gold trader. It’s an asset with a lot of intraday volatility and, in some ways, relates to all the major assets. So, when equities are booming, there’s an impact on gold and the same goes with inflation and interest rate moves,” he said.
Those interested in trading on Exness can visit the company’s official corporate website, Exness.com. Once there, clients can sign up, provide their credential, and proceed to download either Exness’ proprietary platform or third-party platforms to begin trading. “But we’re not yet operating in all jurisdictions of the world. We have some restrictions,” Bunce said.
In the aftermath of banking crises aftershocks, financial authorities have repeatedly assured depositors that the sector is healthy and solid. However, these assurances failed to prevent the domino effect that resulted in the collapse of several U.S. banks. In the wake of these collapses, including those of Silicon Valley, Signature, and First Republic, Federal Reserve officials, led by Chairman Jerome Powell, have emphasized the strength of the sector, and maintained that the incidents were isolated and not indicative of a contagion that would impact the entire financial sector.
During a period of a severe confidence crisis, Swiss bank “Credit Suisse” was acquired by its rival “UBS.” Swiss authorities intervened promptly to prevent the spread of fear and uncertainty to other banks in Switzerland and Europe. On multiple occasions, central banks and banking supervisors have conveyed the message that the recent incidents in the banking sector were not a repetition of the
2008 global financial crisis and should not be considered as equally dangerous. This may be true, as with the exception of Credit Suisse, European banks have weathered the turmoil. The issue appears to be limited to banks operating within the United States, as their situation was exacerbated by their exposure to the Federal Reserve’s hawkish policy of raising interest rates.
According to ECB President Christine Lagarde, the failure of U.S. banks can be attributed to the country’s incomplete implementation of the Basel III requirements. During the previous administration led by Donald Trump, regulatory obligations on liquidity reserves for small and mediumsized banks were lifted, preventing regulators from promptly accessing information on banks’ liquidity status to prevent their collapse. Lagarde pointed out that due to the incomplete implementation of the standards, “only 14 banks – yes, just
14 banks,” were subject to the full Basel III requirements. In contrast, the ECB’s own analysis revealed that the corresponding figure for the EU was 2,200 banks. There are over 4,000 banks in the United States, which averages to 80 banks per state across the 50 states. This number has decreased by more than two-thirds since the early 1980s when it reached a peak of over 14,000. In an interview, MEP Jonás Fernández, a member of the European Parliament’s Committee on Economic and Monetary Affairs, emphasized that the current crisis should “encourage lawmakers to review the way we all think about banking regulation” and fully implement Basel III as soon as possible.
In a November 2022 ECB blog, three high-level ECB officials warned that parliamentary negotiations on the banking package would “deviate from international standards.” Instead, the regulators called for the full implementation of Basel III, which comprises “carefully crafted rules to ensure a minimum worldwide safety net against a large number of risks that we have painfully suffered through in the midst of the global financial crisis.”
The “banking package” is a crucial component of the banking regulatory framework put forth by the EU in the past 10 years, encompassing reviews of capital requirement guidelines and regulations, including those established by the Basel III reforms.
Basel III is a global regulatory framework that promotes bank capital adequacy, stress testing, and market liquidity risks. It was developed in response to the shortcomings in financial regulation revealed by the 2007-08 financial crisis.
The Basel III regulatory framework’s first pillar requires banks to meet minimum regulatory capital requirements. The Net Stable Funding Standard (NSFR) and Liquidity Coverage Standard (LCR) are among these requirements.
The Liquidity Coverage Standard mandates that banks maintain a minimum of 100 percent reserves to ensure they have enough high-quality liquid assets to cover net cash outflows for the next 30 days.
Overall, Basel III aims to enhance the minimum capital ratios for banks to deal with unexpected losses, establish requirements for high-quality liquid asset holdings and funding stability, and mitigate the risks of excessive account withdrawals that could undermine the banks’ abilities. Although designed as a deterrent mechanism against bank collapses, several U.S. banks were still struck by such events this year, with the possibility of re-enactments occurring in the near future.
Silicon Valley Bank was primarily geared toward providing financial services to high-risk startups. Despite being the 16th largest bank in the U.S., it was not regarded as a major player in the industry. This was largely due to its classification as a Tier IV bank, which meant that its assets were below $250 billion and it was not subject to the same level of regulation as larger financial institutions considered “too big to fail.” As a result, Silicon Valley Bank was exempt from complying with the Federal Reserve’s Net Stable Funding and Liquidity Coverage Criteria requirements.
Silicon Valley Bank’s focus on serving high-funding startups required it to maintain sufficient liquidity and comply with Basel rules on liquidity, ensuring that it had enough funds to weather economic downturns. However, during the crisis it faced, the bank was unable to cover a sudden rush of customer withdrawals, which eroded customer confidence and ultimately led to its collapse.
This was largely due to the bank’s investment of its deposits in long-term U.S. Treasuries, which declined in value as interest rates rose, causing the bank’s investment portfolio to suffer.
It is evident that compliance with the Basel III regulatory framework is crucial to ensure stability in the banking sector and prevent future crises from occurring in a domino-like fashion.
Driven by a commitment to customer satisfaction, progressiveness, and operational excellence, Miral has established a distinguished reputation for crafting immersive destinations and experiences that garner international acclaim and captivate visitors worldwide. With an impressive history of success, Miral has consistently delivered globally recognized attractions, solidifying its standing as a regional powerhouse in the industry and a trusted partner of Abu Dhabi in its endeavor to position the emirate as a prominent global tourism hub. Group CEO Mohamed Abdalla Al Zaabi shares Miral’s strategic initiatives that have propelled its remarkable achievements and fostered a mutually beneficial partnership with Abu Dhabi.
How does Miral collaborate with local authorities, businesses and community stakeholders to enhance the overall tourism and entertainment experience in Abu Dhabi?
As a leading creator of immersive destinations and experiences in Abu Dhabi, Miral has been driving the growth of the leisure and entertainment sector for the past 11 years. Through partnerships, design, creation, development, operation, and management, Miral has positioned Abu Dhabi as a top global tourism destination. We have successfully brought to life immersive destinations and experiences such as CLYMB Abu Dhabi, Qasr Al Watan, Yas Waterfront, Warner Bros. World Abu Dhabi, and the world’s first-ever Warner Bros. themed hotel. In 2022, Miral was appointed by the Department of Culture and Tourism - Abu Dhabi (DCT Abu Dhabi) to oversee the Destination Management Strategy of Saadiyat Island. This appointment aimed to strengthen Saadiyat Island’s position within the global culture, leisure, and business tourism ecosystem. Furthermore, Miral, in collaboration with DCT Abu Dhabi, has conceptualized and is developing two exciting upcoming additions to the Saadiyat Cultural District: the Natural History Museum Abu Dhabi and teamLab Phenomena Abu Dhabi. The Natural History Museum Abu Dhabi is expected to be the largest of its kind in the region, offering visitors a 14-billion-year journey through time and space, encompassing the earliest origins of our universe to a captivating perspective on Earth’s future. Miral’s vision for teamLab Phenomena Abu Dhabi is to create an immersive and inspiring space at the forefront of art and technology, igniting curiosity, imagination and creativity. We also work closely with DCT Abu Dhabi to enhance the city’s overall tourism and entertainment sector. By hosting high-profile events such as music festivals, concerts, and sports on Yas Island, Miral contributes to the vibrant cultural landscape of Abu Dhabi. Notable events include the NBA Abu
Dhabi Games 2022, the International Indian Film Academy Awards (IIFA), and ‘The Lion King’ musical, among others. Through a partnership with the Abu Dhabi Convention and Exhibition Bureau (ADCEB), Miral actively promotes the capital as a premier destination for meetings, conferences, and exhibitions (MICE), strategically targeting business events with over 500 attendees. We have maintained a strong partnership with the Abu Dhabi Sports Council for several years, collaborating on world-class sporting events. Yas
Island offers unparalleled entertainment experiences. Our collaboration with Warner Bros. Discovery resulted in the establishment of Warner Bros. World Abu Dhabi, the world’s largest indoor theme park, as well as the opening of The WB Abu Dhabi, the first Warner Bros.-branded hotel. Building upon our success, we have recently announced plans to introduce the region’s first Harry Potter-themed area, further expanding the park’s immersive zones.
Miral places a strong emphasis on innovation and recognizes the importance of digital transformation in delivering captivating and personalized visitor experiences. In line with this commitment, we have partnered with Microsoft to launch a generative AI service, enhancing our help and information offerings for guests at Yas Island’s theme parks and experiences.
Furthermore, our recent collaboration with SeaWorld® Parks & Entertainment to establish SeaWorld Yas Island, Abu Dhabi, marks a significant milestone in reinforcing the capital’s appeal as a prominent global tourism destination with a next-generation Marine Life Theme Park.
Overall, Miral’s partnerships have been pivotal in positioning Yas Island as a premier destination for entertainment and leisure. We are dedicated to working alongside partners who share our vision of creating immersive destinations and experiences that contribute to the growth of the leisure and entertainment industry while promoting Abu Dhabi’s economic diversification.
What economic benefits have been gained from Miral group’s destinations and how does the group contribute to the Abu Dhabi Vision 2030?
Island has successfully hosted prestigious international competitions including the Fina World Swimming Championships, Abu Dhabi HSBC Golf Championship, World Triathlon Championship Finals and FIBA 3X3.
Thanks to our enduring relationship with global intellectual property holders, Yas
Miral is driven by its ambition to be a customer-centric, progressive, and efficient organization. With a proven track record of excellence, we have successfully created globally renowned immersive destinations and experiences that attract visitors from around the world. As a trusted partner in the leisure and entertainment
"Our endeavors have brought significant economic benefits to the region, boosting tourism revenue and creating numerous employment opportunities."
industry, we are aligned with Abu Dhabi’s vision and proudly contribute to the transformation of the sector in Abu Dhabi, as well as the economic diversification and growth of the Emirate. Our efforts position Abu Dhabi as a global tourism hub.
Over the past 11 years, Miral has been creating unique and unforgettable destinations and experiences which have helped establish Abu Dhabi as a top global hub for leisure, entertainment, and tourism. Our endeavors have brought significant economic benefits to the region, boosting tourism revenue and creating numerous employment opportunities.
At the core of Abu Dhabi’s Vision 2030 lies a commitment to innovation. In 2021, we launched the Noor Initiative, a decision analytics strategy that enhances our investment in predictive data analytics and integrates innovation throughout our operations. This initiative enables us to deliver personalized experiences for local and international visitors to Yas Island while solidifying Abu Dhabi’s position as a data-driven capital. We have introduced FacePass, a facial recognition technology, and partnered with Microsoft to launch a new customer-facing generative AI powered by ChatGPT, providing personalized guidance and information to visitors.
We have made significant progress in showcasing Abu Dhabi’s leadership in the virtual world through a groundbreaking partnership between DCT Abu Dhabi, Aldar, Miral, twofour54, Abu Dhabi
Motorsports Management, Flash Entertainment, and Yas Island. Together, we have recreated an entire physical destination across world-leading immersive platforms, a first for the UAE. This allows virtual visitors to access Yas Island and experience its wonders through the metaverse, regardless of their location.
As the leisure and entertainment industry continues to grow, it is crucial to plan for staffing and ensure that Emirati talent is well-prepared not only to be a part of it but also to lead. Miral’s two-year Maharaty talent development program and the three-month Ambassador training program aim to establish a solid foundation for UAE nationals in their career development.
What strategies does Miral employ to maintain the cultural significance and authenticity of the landmarks it manages, such as the Natural History Museum Abu Dhabi?
Building on our remarkable achievements on Yas Island, we are now applying our expertise to the management of Saadiyat Island, an equally impressive destination in Abu Dhabi. With Saadiyat Island falling under Miral’s jurisdiction, we can enhance our offerings to guests from around the globe by incorporating culture and arts into
their already diverse experiences. This will showcase Abu Dhabi’s rapid evolution into a comprehensive tourism hub. Our forthcoming projects, teamLab Phenomena Abu Dhabi and the National History Museum Abu Dhabi, will provide a captivating cultural journey, aligning with the Saadiyat Vision 2025. These initiatives aim to bring a new realm of educational exploration to the Abu Dhabi community.
Can you tell us about Miral’s sustainability initiatives to minimize the environmental impact of its operations?
Environment is one of Miral’s three pillars in our new brand vision, along with people and community. We prioritize the environmental impact of our destinations and experiences, striving for sustainable growth. This commitment aligns with Abu Dhabi and the UAE’s visionary goal of achieving clean energy and net-zero objectives through innovative solutions.
Sustainability is not just a moral duty but also a strategic advantage that adds value for our customers, partners, and society as a whole.
We partnered closely with Emerge, a joint venture between Masdar and French multinational utility company EDF, to inaugurate the Warner Bros. World Abu Dhabi’s 7-megawatt peak (MWp) rooftop solar photovoltaic (PV) project. This initiative allows us to generate 40 percent of the theme park’s annual energy demand using approximately 16,000 solar modules covering 36,000 square meters of roof area. Furthermore, we collaborated with Emerge to develop a rooftop solar PV system for SeaWorld Yas Island, Abu Dhabi, which promotes energy efficiency and reduces carbon footprint. As part of the Year of Sustainability, the marine life theme park is meticulously designed to integrate Sheikh Zayed’s legacy and deep respect for nature into all park operations. It also plays a vital role in raising environmental awareness and safeguarding marine life in Abu Dhabi, the UAE, and the broader region.
marine research, rescue, conservation, and animal welfare. This partnership marks SeaWorld’s first overseas park in Abu Dhabi. In collaboration with Miral, we are dedicated to delivering top-notch immersive destinations and experiences. Guests can look forward to a wide range of interactive exhibits and immersive experiences that will foster a deeper understanding and appreciation for marine life, providing education and inspiration for the entire family.
SeaWorld Abu Dhabi spans five indoor levels, encompassing an approximate area of 183,000 sqm. The park boasts an impressive water volume of over 58 million liters, housing a diverse range of marine animals, including 150 species of birds, fish, mammals, and reptiles, totalling more than 100,000 individuals.
A major highlight of SeaWorld Abu Dhabi is its unrivaled multi-species marine-life aquarium, which holds a
Our partnership with SeaWorld Parks & Entertainment is a natural extension of our ambition to become the region’s premier leisure, tourism, and lifestyle entity. Yas Island already offers exceptional attractions, and we are excited about the opportunity to enhance the island’s offerings with SeaWorld’s extensive expertise in
What innovative features and experiences does SeaWorld Abu Dhabi offer?
SeaWorld Yas Island, Abu Dhabi, is the region’s pioneering marine life theme park, offering an unparalleled ‘One Ocean’ experience that unveils the intricate connections between terrestrial life and the ocean. This captivating park provides immersive and enjoyable familyfriendly activities, including close encounters with animals, state-ofthe-art aquariums, dynamic animal habitats, thrilling rides, interactive educational experiences, inspiring entertainment, and exceptional dining and shopping opportunities. Its primary objective is to inspire guests to discover more about marine life and actively contribute to conservation initiatives through engaging experiences.
staggering 25 million liters of water. This extraordinary habitat is home to over 68,000 marine animals, including sharks, manta rays, and other fascinating creatures, encouraging guests to delve deeper into the endless diversity of the vast ocean.
Adjacent to the park, a dedicated research and rescue center operates as an advanced knowledge hub, focusing on the indigenous Arabian Gulf and marine life ecosystems. Led by world-class marine scientists, veterinarians, animal care professionals, rescue experts, and educators, this center collaborates with peers, environmental organizations, regulators, and academic institutions to drive longterm conservation efforts in the region. Additionally, a dedicated rescue team is available round-theclock to support local authorities.
"Environment is one of Miral's three pillars in our new brand vision, along with people and community. We prioritize the environmental impact of our destinations and experiences, striving for sustainable growth."Warner Bros. World, Abu Dhabi
With a rich historical legacy, family businesses have greatly influenced Dubai’s distinctive economic model. Recognizing their continued importance, these businesses are poised to play a vital role in achieving the ambitious goals set forth in the Dubai Economic Agenda D33. This comprehensive agenda aims to elevate private sector investments in development projects to an impressive AED1 trillion by 2033, highlighting the integral contribution that family businesses will make towards its realization.
In line with the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai, the Dubai Centre for Family Businesses was inaugurated on May 16 with the purpose of developing an integrated system to support the growth of family businesses in Dubai. Under the auspices of Dubai Chambers, the newly established Centre strives to promote the advancement of the family business sector and enhance its economic impact, thereby strengthening
the emirate’s long-term strategic objectives. Additionally, the Centre will introduce initiatives aimed at fortifying the sustainability and expansion prospects of family businesses in Dubai.
The inauguration of the Centre is part of a comprehensive plan approved by HH Sheikh Mohammed bin Rashid at the Dubai Council’s fifth meeting in May 2022. This plan aims to enhance systems and processes that ensure the sustainability of family businesses over the next 100 years.
“The inauguration of the Dubai Centre for Family Businesses aims to strengthen the economic system that the emirate provides to support family businesses, develop the business community, establish confidence in the business environment, and enhance the sector’s ability to keep pace with global developments to ensure sustainable economic growth,” said His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance of the UAE, at the inauguration.
His Excellency Abdul-Aziz Al Ghurair, Chairman of Dubai Chambers, said: “With an innovative vision and operational procedures, the Centre provides best-in-class services to all categories of family businesses including large companies and small and medium-sized enterprises (SMEs), with support offered to the founders, the next generations, and senior executives.”
Al Ghurair highlighted the Centre’s commitment to providing comprehensive support and training programs, with a particular focus on strategic priorities such as intergenerational knowledge transfer, governance, and enhancing the competitiveness and protection of interests for family businesses. Dubai Chambers is dedicated to improving operational efficiency and fostering leadership investment to ensure a sustainable future for these businesses. Al Ghurair also emphasized the importance of collaboration with strategic partners to ensure the success of upcoming initiatives.
Established by Decree No. (45) of 2022, the Dubai Centre for Family Businesses operates with an innovative approach, focusing on enhancing the managerial expertise of family business partners, founders, members, and successors. Its primary objective is to facilitate a seamless transition of leadership and management within family businesses. The Centre aims to achieve this by providing comprehensive knowledge about available government services, relevant legislation, and promoting the adoption of robust governance systems to ensure long-term sustainability and family ownership. Furthermore, the Centre offers invaluable guidance on initiating family businesses, develops templates for essential family business documents, and proposes effective solutions to challenges encountered with government and private entities. In addition to its advisory role, the Centre actively participates in organizing and participating in events,
exhibitions, and conferences that revolve around family businesses and ownership, thus furthering the objectives set by Dubai Chambers.
The Centre’s programs encompass a series of educational sessions focused on UAE laws and top governance practices, playing a crucial role in succession planning within family businesses. These sessions aim to achieve the following objectives:
• Increase awareness regarding the significance of establishing robust governance systems and understanding the requirements for implementing effective governance.
• Promote awareness of the services offered by the Dubai Centre for Family Businesses, emphasizing the support available to family companies.
• Facilitate interaction among family business owners, fostering networking opportunities and the exchange of knowledge.
• Facilitate the sharing of global best practices through meetings with leading family companies.
Additionally, the Centre will establish a collaborative program in partnership with renowned global institutions. This initiative aims to create a certification and accreditation framework for family business advisors. By equipping advisors with the necessary qualifications, they become part of a designated pool of experts that families can choose from. This ensures access to world-class certified and accredited advisors for Dubai’s family businesses, enhancing the quality of advisory services available to them.
Non-communicable diseases (NCDs) are rapidly emerging as an alarming menace to public health and economic prosperity in the GCC countries. Shockingly, they account for a staggering 75 percent of all deaths and disabilities in the region. In its new report on the latest economic developments in the Gulf region, titled “The Health and Economic Burden of Non-communicable Diseases in the GCC Countries,” the World Bank uncovers the significant cost of NCDs to the economies of the Gulf. In a candid interview with Economy Middle East, Issam Abousleiman grimly states, “NCDs are the major killers in the GCC today.” The economic toll they exact is nothing short of catastrophic, surpassing a colossal 5 percent of the GDP, based on 2019 data for the GCC. Bolstering these harrowing figures, the World Bank report cites a ground-breaking study from the Journal of Medical Economics. The collaborative effort between World Bank experts and influential stakeholders within the Gulf Cooperation Council reveals an alarming estimate: $16.7 billion in direct medical costs attributed
to seven major NCDs in 2019 alone. But the devastation caused by NCDs doesn’t stop there. The economies of these nations bear the weight of significant indirect costs, eroding their vitality and human capital. In 2019, labor force productivity losses exceeded a mind-numbing $80 billion, and these costs are projected to soar even higher with an aging population and the relentless surge of noncommunicable diseases.
Addressing the health and economic burdens of NCDs in the region requires addressing the underlying risk factors that cause them in the first place. The World Bank affirms that several countries in the Gulf Cooperation Council have already taken bold strides in combating the risk factors that breed NCDs. This battle requires a comprehensive approach at the governmental level, a strategic focus on prevention, targeting the young and vulnerable, and implementing comprehensive actions and interventions across various sectors.
Pace of GCC countries
‘ growth expected to slow to 2.5 percent in 2023
In addition, according to the latest World Bank report, the economies of the Gulf Cooperation Council (GCC) are projected to experience a slower pace of growth in 2023 compared to the previous year. This is primarily attributed to the decline in oil and gas revenues, as well as the overall slowdown in global economic activity.
The report forecasts that the GCC economy will grow at a rate of 2.5 percent in 2023, followed by a slightly higher growth rate of 3.2 percent in 2024. This projection comes in contrast to the significant growth observed in the region’s gross domestic product (GDP) in 2022, which reached an impressive 7.3 percent. Such growth was mainly driven by a substantial increase in oil production throughout most of the year. The World Bank identifies the decline in the hydrocarbon GDP as the primary factor behind the region’s underperformance. It is expected to contract by 1.3 percent in 2023 due to the announcement of production cuts within the “OPEC+” framework in April 2023, alongside the global economic slowdown.
Nevertheless, the World Bank points out that the robust growth anticipated in the non-oil sectors, projected to reach 4.6 percent in 2023, will help mitigate the shortcomings in hydrocarbon activities. This growth is largely attributed to factors such as private consumption, fixed investments and favorable fiscal policies enacted in response to relatively high oil revenues in 2023. It also emphasizes that the modest growth rates witnessed this year are supported by the structural reforms implemented in the GCC over the past few years.
According to the report, Bahrain’s economic outlook hinges on the future of oil markets and the progress made in implementing structural reforms as part of the revised program aimed at achieving fiscal balance.
In 2023, the growth rate is anticipated to decline to 2.7 percent. However, over the period of 2024-2025, the average growth rate is projected to reach 3.2 percent, with
ongoing fiscal consolidation efforts.
The hydrocarbon sector is expected to contract by 0.5 percent in 2023. Conversely, the non-hydrocarbon sectors are anticipated to expand by 3.5 percent, primarily driven by the recovery in the tourism and services sectors, as well as the continuation of infrastructure projects.
Kuwait
Despite the recent construction of the Al-Zour refinery, the Kuwaiti economy is projected to experience a slowdown in economic growth, with a rate of 1.3 percent expected in 2023. Additionally, the oil sector is anticipated to contract by 2.2 percent during the same period. However, there is some positive outlook for the non-oil sectors in Kuwait, which are expected to exhibit growth of 4.4 percent in 2023. This growth is primarily driven by private consumption, indicating a strong domestic demand within the country.
The World Bank predicts that the Omani economy will sustain its growth, albeit at a slower pace, primarily due to the accelerated implementation of structural reforms outlined in Vision 2040. However, the overall growth rate is expected to decline to 1.5 percent in 2023. Additionally, the hydrocarbon sector is projected to contract by 3.3 percent as a result of the production cuts within the “OPEC+” framework. On a positive note, the non-oil sector is anticipated to continue its path of recovery, achieving a growth rate of 3.1 percent in 2023. This recovery will be supported by expedited resource allocation for infrastructure projects, an increase in industrial capabilities derived from renewable energy sources, and the development of the tourism sector.
According to the World Bank’s projections, there will be a decline in
real GDP to 3.3 percent in 2023 following a robust performance in 2022. The hydrocarbons sector is anticipated to expand by 0.8 percent, while significant growth is expected in the non-hydrocarbon sectors, projected at 4.3 percent this year. This growth will be primarily driven by both private and public consumption.
Economic growth is expected to slow to 2.2 percent in 2023 following a significant increase in GDP of 8.7 percent in 2022, and the GDP of the oil sector will decline by 2 percent due to Saudi Arabia’s commitment to OPEC+ production cuts. The non-oil sectors are expected to witness growth rates of 4.7 percent in 2023.
The anticipated economic growth for 2023 is expected to be slower compared to 2022, primarily due to several factors including the global economic downturn, a contraction in oil production, and tighter public finances. As a result, the real GDP is projected to grow by 2.8 percent in 2023. The decline in oil activity, estimated at 2.5 percent, contributes to this slower growth. However, the non-oil sector is expected to experience robust growth of 4.8 percent, which will help alleviate the impact of the contraction in oil activities. This growth is driven by strong domestic demand, particularly in sectors such as tourism, real estate, construction, transportation, and manufacturing industries.
Is an inevitable economic recession on the horizon or not? This question has no definitive answer due to the divergent positions and opinions out there. However, what is evident is that the global economy is still suffering, and the suggested remedies are either insufficient or the result of misdiagnosis.
In the United States, despite official assurances that the sector is healthy and robust, a murky economic picture is emerging due to continuing banking crises. The economy experienced a sharp 1.1 percent slowdown between January and March, while inflation remains above target despite gradual declines. Consequently, the Federal Reserve has raised interest rates by 25 basis points for the tenth consecutive time.
However, it appears that the Federal Reserve will ease its stance on future interest rate procedures given that signs of an economic slowdown are starting to emerge in the U.S. The central banking system has acknowledged that its hawkish policy is putting pressure on the economy and causing disruptions in the banking sector.
In addition, there is the prospect of a historic first for the U.S.: a default. Such an event would shock both the U.S. and the world.
Economists are concerned that if the catastrophic debt-ceiling-breach scenario materializes, the U.S. GDP could plummet by 6 percent, and financial markets could drop 45 percent in Q3 2023. They assert that a standoff between Republicans and Democrats over the debt ceiling could trigger a recession in the U.S. economy, even if it does not result in a default. According to a recent report presented to Treasury
Secretary Janet Yellen, the Treasury Borrowing Advisory Committee stated that “many private investors expect a recession next year.” Additionally, a March Federal Reserve poll revealed a 20 percent likelihood of a recession beginning in the first half of 2023, and over a 50 percent probability of a recession occurring by year-end.
In Europe, governments are still struggling to combat inflation, while the European Central Bank is continuously raising interest rates to tame it. The ECB recently raised interest rates by 25 basis points to 3.25 percent, as anticipated. Further monetary tightening may be required by the ECB to curb inflation. Despite a significant drop in overall inflation in the European Union from readings of over 10 percent recorded last fall, accompanying price pressures are still mounting, indicating that inflation rates may stabilize above their targets if the ECB does not increase interest rates further. “We will not stop ... This is very clear ... We know we have more to go,” ECB President Christine Lagarde said.
In contrast, China presents a completely different scenario, something the International Monetary Fund is relying on to bolster global economic growth this year. China’s economy had a robust beginning in 2023, with consumers going on a spending spree after three years of stringent pandemic-related social restrictions. As a result, its GDP grew by 4.5 percent in the first quarter of the year, surpassing previous projections of 4 percent growth. Furthermore, the current trade sanctions between the U.S. and China have raised concerns of an imminent global fragmentation that could have far-reaching consequences.
While the possibility of a U.S. economic recession can be contained, the main concern is the timing of it. According to the Federal Reserve, the banking crisis could result in a moderate recession later this year. However, Bank of America expresses concern that a more severe recession in the U.S. could be on the horizon. “The risks are more balanced, as on the one hand there is still a chance to avoid negative growth, and on the other hand there is another chance of a deeper recession than we expected,” it says in a note.
Members of the U.S. National Association for Business Economics are evenly split on whether a recession may occur within the next twelve months.
Federal Reserve Chairman Jerome Powell believes that there is still a possibility that the central bank can slow down price growth without harming the economy, which would go against historical trends, and the Fed’s work may be reaching its conclusion.
For his part, U.S. President Joe Biden expresses confidence that the Federal Reserve can manage inflation without triggering an economic recession. Following the Fed’s recent action, he stated, “I still think it’s possible that this time will be really different ... Avoiding a recession, in my opinion, is more likely than having one.”
In Europe, most economies narrowly evaded a recession this winter. Now, the continent faces the challenging task of sustaining the recovery, combating inflation, and preserving financial stability. The eurozone’s economic performance
can be characterized as more resilient than anticipated, as it managed to evade what just a few months ago was likely the worst recession expected.
The IMF emphasizes that additional interest rate hikes are necessary in the Eurozone to curb inflation. The IMF also believes that central banks should not stop monetary tightening too early due to concerns that doing so may raise financial risks. The IMF acknowledges that achieving its inflation target may require a severe recession.
According to a 2023 forecast survey of top economists by the World Economic Forum, opinions are divided on whether a global recession will occur this year. Approximately 45 percent of economists expect the global economy to enter a recession, while an equal percentage believe that the economy will avoid such a scenario.
Despite the ongoing global events, Gulf economies are seemingly insulated from the risks of a global recession. The IMF’s positive expectations for the region persist, as they have repeatedly stated that the Arab Gulf economies have the potential to navigate in a different direction than the current global trends.
Economists’ various expressions about the inevitability, immediacy, or unlikelihood of a recession highlight the uncertainty in predicting the global economy’s future. The question remains whether we will encounter a new landscape that places the global economy in an unexpected situation.
The BRICS nations, consisting of Brazil, Russia, India, China, and South Africa, are actively seeking to expand their alliance by inviting additional countries to join, forming what is referred to as BRICS+. Furthermore, there have been discussions within the BRICS group about the possibility of creating a shared currency called BRICS. Until recently, the U.S. dollar was used in nearly all oil trades conducted by Saudi Arabia, Russia, India and China. Things, however, appear to be changing. “Russia is already trading energy with India and China in rupees and yuan respectively. Saudi Aramco is building
a $10 billion oil refinery in China and considering selling oil to China in yuan. Meanwhile, France and China have finalized their first-ever deal on 65,000 tons of liquefied natural gas in yuan,” Vijay Valecha, chief investment officer at Century Financial, told Economy Middle East.
China’s yuan recently replaced the U.S. dollar as the most traded currency in Russia as well as the most used currency to settle cross-border payments in the Asian country. BRICS countries comprise around 42 percent of the world’s population, and represent nearly 24 percent of global
GDP. They account for 16 percent of world exports and 15 percent of world imports. It is estimated that by 2028, the G7 will only represent 28 percent of the global economy, while BRICS will make up 35 percent.
Saudi Arabia, the United Arab Emirates and Egypt are among 16 other nations keen on joining the BRICS bloc, with recent reports indicating that key member China aims to push the Chinese yuan as the de-facto currency in the bloc in order to de-dollarize trade. Vijay confirmed that Chinese authorities will continue to push for the yuan to play a greater role in regional
trade by promoting greater local currency settlement between the yuan and other regional currencies. “However, the potential introduction of a common BRICS currency is in sight,” he said.
John J. Hardy, head of FX Strategy at Saxo Bank, told Economy Middle East that “China aims to increase trade in the renminbi. However, using national notes as a reserve currency presents challenges as it requires free capital flows, which China currently restricts, as well as significant external deficits to bolster offshore liquidity.” It is worth noting that China operates with significant surpluses, which further complicates this endeavor.
The U.S. dollar represents nearly 90 percent of global exchange trading and just under 60 percent of all foreign currency reserves held by central banks, while over 74 percent of all foreign trade uses the U.S. dollar.
In early May, IMF Managing Director Kristalina Georgivea noted that there was no viable alternative among global currencies to replace the dollar in the foreseeable future despite a slow shift away from the greenback. Recent data indicates that the U.S. dollar’s share of reserves has declined from 70 percent to just below 60 percent. Furthermore, the recent U.S. banking crisis contributed to weakening the U.S. dollar.
Nonetheless, “currently, there are no viable alternatives to the U.S. dollar. It remains indispensable due to its global acceptance and the vast value of global assets, amounting to tens of trillions of U.S. dollars, and denominated in the greenback,” John said. “These assets would require conversion to a different currency if a transition to a new system were to occur. As a result, the U.S. dollar continues to maintain its position as the most liquid and irreplaceable currency for the foreseeable future.” Vijai said a BRICS currency may come to play a greater role in regional trade in East and Southeast Asia, “but this is unlikely to transform it into a fullfledged reserve currency capable of rivalling the dollar or the euro in the short [or even medium] term.”
In 2014/15, the BRICS countries came together to establish the New Development Bank with an initial capital of $50 billion. Subsequently, the UAE joined the NDB as a member following the enactment of Cabinet Resolution No. (19) of 2021.
In order to facilitate infrastructure investment in both BRICS and Asian nations, the NDB and the Asian Infrastructure Investment Bank are actively pursuing the utilization of national currencies for investment within their respective member states. These institutions are often regarded as viable alternatives to traditional financial institutions like the World Bank and the International Monetary Fund.
“The aim of the BRICS NDB and Chinese AIIB is to mobilize resources to fill the large gap in infrastructure investment and to promote sustainable development in developing countries. Although the size and potential of the NBD and AIIB is smaller, it is not so different from the IMF and the World Bank,” Vijay explained.
“The prospect of alternative funding does not necessarily imply a shift away from the World Bank and IMF. Experts estimate that the developing world requires trillions of dollars in infrastructure investment. So, the AIIB and NDB could very well complement World Bank efforts, simply filling funding gaps.”
Looking at it from a different angle, John clarified that the NDB and AIIB are “organizations [that] could potentially become players in the ‘fragmentation game,’ or what some perceive as ‘deglobalization,’ a trend characterized by the emergence of fragmented interests in trade, supply chains and security alliances.”
“In this scenario, if a country determines that China is its primary trade partner and chooses to conduct trade in the renminbi, it may also seek funding for new development projects and financial assistance from
these newly emerging organizations. While the future roles and influence of these organizations remain uncertain, their emergence could reflect the evolving landscape of global trade and economic relationships,” he explained.
China and India are important to both the UAE and Saudi Arabia as destination markets for their investments and vice-versa. Therefore, the decision to join BRICS would present new opportunities for these two countries.
“Saudi Arabia and the UAE are important regional and global players, and their addition to BRICS would provide a significant economic and political influence on the group,” Vijay said. “Saudi Arabia is a major player in the global petrochemical industry, with a production capacity of more than 70 million tons per year. The country’s admission to BRICS would provide its members with a reliable partner in the energy sector and would help promote stability in global oil markets.”
Vijay added that the UAE joining the BRICS group would provide it with new investment and trade opportunities, which would help to diversify its economy and reduce its reliance on oil. “The UAE’s addition to BRICS is particularly quintessential from the standpoint of the ongoing shift toward renewable energy sources, and would give it access to new technologies and expertise, which would be crucial for its efforts to diversify its economy and create new jobs.”
Fares Akkad, MEA regional director at Meta, shares insights on the company’s dedication to nurturing the creative and business landscape of the region. In this discussion, he emphasizes an intricate network of initiatives aimed at empowering creators and enterprises, while prioritizing a secure ecosystem that safeguards the privacy of its vast user base exceeding 300 million in this region. With Meta’s relentless pursuit of cutting-edge technologies and the organization’s enhanced agility, Akkad envisions a promising future where the Middle East and beyond will witness Meta’s triumphant strides.
Meta recently unveiled an insightful opportunity report highlighting the Middle East’s growing interest in embracing innovative digital and immersive tools. Akkad, who strongly believes that the region is bursting with phenomenal creative and business potential, says the company is committed to “supporting initiatives and investing in capacity-building projects for the future.”
Through various initiatives like Creators of Tomorrow, Spark AR, and Community Stories, Meta actively inspires, celebrates, and supports the diverse pool of content creators, empowering them to make a significant impact using Meta’s platforms.
Over the past several years, Meta has also been actively engaging with local small and medium-sized businesses (SMBs), communities, and content creators. Notable campaigns like #LoveLocal have celebrated
and championed local enterprises during key shopping seasons, showcasing unique gifting ideas crafted by small businesses across MENA. Akkad highlights how Meta encourages holiday shoppers to support these local SMBs, fostering a thriving ecosystem.
Earlier this year, Meta inaugurated its pioneering Metaverse Academy, based in Riyadh. This ground-breaking initiative aims to equip regional professionals with the necessary skills and knowledge to pursue careers related to the metaverse, further solidifying Meta’s commitment to the region’s future growth and opportunities.
Meta has also directed its focus toward the youth sector, launching impactful programs to promote digital literacy and combat online bullying.
Collaborating with UNHCR, Meta introduced a five-week digital literacy program for youth and refugees, while simultaneously launching an anti-bullying campaign called “دعس_ظفلاملا#” (speak kindly). These initiatives encourage young people to foster kindness online and promote the normalization of speaking up against online bullying.
In Palestine, Meta partnered with UNRWA and the Center for Continuing Education (CCE) at Birzeit University to launch the flagship “My Digital World” program. This program equips Palestinian students with essential skills and knowledge on digital security, empowering them to leverage the potential of an increasingly digital world.
With 300 million users in the region, Meta prioritizes safeguarding the privacy of its users, making safety and security integral to all its creations. by consistently developing industryleading approaches to brand safety, transparency and combating misinformation. “This comes before anything else. It is the right thing to do for our community and our business, and it’s everyone›s responsibility at Meta,” says Akkad, who admits that “we can’t – and shouldn’t – do it alone.”
Toward this end, Meta has collaborated closely with industry partners, such as the Global Alliance for Responsible Media (GARM), an industry trade body, to ensure that harmful content does not generate monetization. Additionally, Meta actively collaborates with independent organizations and human rights experts to develop, evaluate, and effectively enforce rules pertaining to hate speech on its platforms.
“We are also building tools that give people more transparency and control over things like Manage Activity, Off-Facebook Activity and Privacy Checkup. We’re improving these tools all the time and we design every new product and feature with privacy in mind,” Akkad says. But “privacy” can mean different things to different people - everyone has their own preferences about the kinds of data they want to share and how it’s used. “Just like in real life, people want to connect in both public and private spaces. In the past we have focused more on the public side – the digital town square – but we believe people increasingly want the equivalent of a digital living room too. That is where end-to-end encryption comes in: it is already the leading technology used by many services to keep people and their information safe from hackers and criminals.” Akkad says.
Meta envisions an exciting future, showcasing its advancements in Virtual Reality (VR), Augmented Reality (AR), Artificial Intelligence (AI), and beyond. Akkad highlights Meta’s focus on deepening connections through social presence in the realms of augmented and virtual reality, saying: “We see a future in which the next best thing to being physically
Meta Quest Pro, where we focused on mixed reality tech that is a key part of the journey toward full augmented reality devices. It is clear that over time mixed reality will help VR devices become increasingly compelling alternatives to laptops and desktop computers, placing virtual interfaces on your desk or in your hands,” Akkad says. Regarding AI, Akkad highlights Meta›s position as a leader in leveraging this technology, particularly in delivering relevant and personalized advertisements through its discovery engines.
“We’re now seeing that AI is increasingly able to do more with less data to meet the privacy concerns of our users. That is why over the last couple of years we have been investing to evolve our business tools to rely on less data, while helping to ensure a level playing field for both large and small businesses. These investments are paying off already – in the fourth quarter of 2022, advertisers saw over 20 percent more conversions than in the year before using our platforms.”
next to someone is feeling like you’re right there next to them in VR.” Meta firmly believes that VR has the potential to revolutionize people’s lives and work. To bring this vision to fruition, Meta collaborates with prominent technology players and pioneers innovative solutions. “Last October we introduced the
As part of Meta’s future growth strategy, the company is undertaking a restructuring process to become a more agile organization. This effort involves a reduction in workforce size, aimed at streamlining operations and optimizing resource allocation toward key areas of high growth potential – such as ads and business messaging platforms as well as leveraging AI to power its ads performance and discovery engine.
Akkad believes that this restructuring “will pave the way for success to better support our business partners, in the Middle East and beyond.”
"Meta is supporting initiatives and investing in capacity-building projects for the future."
A recent analysis conducted by researchers at NYU, Princeton and the Wharton School indicates that the development of generative AI technologies, such as ChatGPT, could potentially threaten numerous jobs in various fields, including university teaching professions. While some professors have already started utilizing ChatGPT to generate syllabi or suggest readings, the technology has the potential to gradually assume more responsibilities and encroach upon the roles currently fulfilled by holders of doctorates who have dedicated a significant portion of their careers to learning and researching in their fields.
In November 2022, Professor Paul J. Hopkinson assumed the role of dean of the College of Interdisciplinary Studies at Zayed University. With over 20 years of experience in academia, including his most recent position as head of the School of
Social Sciences at Heriot-Watt University Dubai and Edinburgh Business School, Hopkinson brings a wealth of knowledge and expertise to his new position.
“I think it’s inevitable that some aspects of what we do will be delegated to AI. We’re still going to need people to design strategies for teaching and learning, to take pride in student achievements in college and the workplace, and personally interact face to face with learners. But we have already seen virtual assistants taking over routine tasks and triage in a variety of service settings,” Hopkinson told Economy Middle East in a recent interview.
Believe it or not, AI is already playing a crucial role in education, particularly in the realm of emotional intelligence. However, many educators are still grappling with the question of how best to prepare today’s students for the future of work.
“Although the world of work is changing rapidly, our educational systems have remained largely unchanged for decades,” Hopkinson said. He went on to say that the World Economic Forum and prestigious consulting firms such as McKinsey and BCG have identified the skills gaps that graduates encounter upon entering the workforce and throughout their careers as the pace of technology advancements accelerates.
“It’s certainly soft skills that are preeminent amongst those areas, but there are gaps around digital skills as well,” he added. Hopkinson noted that the WEF has made several noteworthy observations, one of which is the realization that many of the jobs of the future have yet to be created. “In order to secure those future jobs, we need a broader set of skills, including technical skills, soft skills, interpersonal working skills, and we need to have industry-specific skills,” he added.
“Schools and universities are now beginning to recognize the need to build those broader skillsets and make sure they are not merely add-ons within the curriculum, but actually embedded within it,” Hopkinson said.
“We are building a set of foundational skills in the first, general education year of our degrees at ZU, and then building on them as the students go through each subsequent year, teaching students to think, learn, communicate, and interact in effective ways that will set them up for their future careers,” he added.
Hopkinson noted that emotional intelligence is a valuable skill inherent in all humans, and its importance will continue to grow as machines take on more routine tasks in the future.
The potential interaction between AI and emotional intelligence is intriguing. Hopkinson suggests that AI may not only automate everything but also assist us in developing greater empathy and better interpretation of situations by providing prompts and cues. For example, generative AI technologies such as ChatGPT employ analytical tools to comprehend how individuals react to a particular conversation between two or more people.
“We have these incredible technological tools that curate that data. It’s not so much that we don’t need schools or universities anymore, but we need those schools and universities to move with the times, recognize that there are incredible information tools out there and instead of legislating against their use because of cheating concerns, they should be helping students to embrace these technologies in innovative and responsible ways,” Hopkinson said.
“If we do nothing else in schools and universities, we should focus on enabling students to think and learn how to make the most effective use of the tools and content at our disposal, because in today’s environment, we have an abundance of information that’s available to us,” he added. According to Hopkinson, these tools aid in understanding how individuals react and interpret data and situations, enabling the curation of information to formulate solutions for problems or aid in their diagnosis. “Technology is an enabler. It shouldn’t dictate the nature of the learning experience, but rather should be there to help us facilitate a better one,” he said.
“Something that we’ve been doing at ZU is moving very firmly as an institution toward interdisciplinary education, recognizing that many of the problems that we face in the world today are what we call complex or wicked problems,” Hopkinson said.
He emphasized that we are currently inhabiting a VUCA environment, which stands for volatile, uncertain, complex, and ambiguous. This environment presents us with various challenges and opportunities, including those resulting from disruptive technologies, climate change, social exclusion, ecosystem damage, and economic downturns.
“They’re not easily addressed through a single discipline, from one set of lenses. So, part of the challenge is to change our pedagogy to put us in a better position to be able to solve problems, to recognize that different disciplines bring different benefits,” he said.
Zayed University provides an interdisciplinary problembased curriculum using highly active learning, ensuring students are optimally active during class sessions using higher order learning capabilities around critical thinking and creative thinking.
“Using experiential and applied learning from day one, students work on practical problems together with employers whom we bring in, creating partnership challenges in real world settings,” Hopkinson said. “Over time, as they mature, they get used to working with businesses and solving practical problems, and become progressively more collaborative, independent and confident in what they’re doing,” he added Hopkinson emphasized that partnerships with employers can assist in developing student talent, with a focus on lifelong learning and the necessity to reskill and upskill throughout their careers.
Imagine a world where machines not only think for themselves, but also learn, create and accomplish tasks without any human intervention. Amid this technological marvel, a valid concern emerges: What if these autonomous systems are capable of responding to sinister requests such as “show me how to destroy the world using solar energy” or “create a virus that will wipe out millions”?
Enter the era of AutoGPT and AI agents, ceaselessly toiling away around the clock to fulfill such inquiries. We can find solace in the fact that, for now, they have yet to achieve complete accuracy if used for malicious intent.
Large language models (LLMs) like ChatGPT have traditionally been limited to executing one task at a time. They could answer questions, generate text, or solve code, but would ultimately require human intervention or new prompts to proceed further.
Which brings us to Auto-GPT, an extraordinary open-source AI tool that revolutionizes the landscape. By harnessing the unparalleled potential of GPT-3.5 and GPT-4 models, Auto-GPT takes on a myriad of tasks autonomously, without the need for consecutive instructions. Its advanced framework simulates human-like traits such as crafting original content, engaging in complex problem-solving and making decisions. Moreover, this cutting-edge technology seamlessly interfaces with apps, the internet, and software, while dynamically validating external data and generating its own prompts for self-improvement.
In the realm of AI, these amazing applications are referred to as “recursive AI agents,” owing to their remarkable ability to independently generate new prompts based on their own generated results. The possibilities are awe-inspiring, yet also give rise to a hint of trepidation.
In a conversation with Economy Middle East, Andrey Almiashev, CEO of Spheroid Universe, painted a vivid picture of the future: “Increasing numbers of services will open APIs for AI agents, like AutoGPT. The sharp increase in labor productivity that AI will provide, the reduction in the cost of producing services and the reduction in the cost of services themselves are the immediate consequences of the impending AI revolution. Tens of millions of people are expected to be left without work, and their number will grow very quickly,” Almiashev cautioned.
Sandie Overtveld, Senior Vice President of APJ & MEA at Freshwork, offered a perspective on the vital role of human oversight in the AI realm: “AI will always need supervision. AI will take the mundane out of work and keep the workforce engaged, improve efficiency for businesses, but should also have human intervention to make sure data is dealt with properly and privacy is maintained.”
Nevertheless, the proficiency of AI agents still falls short in delivering accurate results.
Renowned AI expert Nick Bostrom recently suggested that the latest generation of AI chatbots might have the capacity to experience feelings, with far-reaching moral and ethical implications yet to be fully explored.
One thing remains certain: Auto-GPT possesses the remarkable ability to constantly enhance itself by rigorously evaluating and testing updates to its own code. This iterative process aims to fortify its performance, ensuring robustness and efficiency in delivering results.
“AI can make you a superhuman. Now you can express yourself with art created and modified from your prompt. Today, you are only hours away from creating the app you need. The same goes for design, music, modelling and many other skills and tasks that might have been previously
inaccessible to you,” Almiashev said.
“So yes, the technology brings both an unlimited boost to your skills and at the same time decreases the value of those skills if you were a professional who was earning with them,” he added.
The transformative potential of AI agents, including AutoGPT, extends beyond mere automation. These advanced systems possess the remarkable capability to assist businesses in autonomously enhancing their financial performance. When prompted to examine organizational practices, AI agents swiftly provide intelligent suggestions and invaluable insights.
With a simple request like “help me grow my restaurant business,” an AI agent like Auto-GPT springs into action, launching a targeted campaign to identify potential target markets, devise a tailored marketing strategy, and much more, autonomously. What’s truly remarkable is that these AI agents consistently seek ways to improve their own performance.
“At Binance, we have been actively exploring and utilizing both ChatGPT and AI agent-based solutions. We have employed them in various applications, including AI generative projects like Binance Bicasso, CS AI ChatBot, and internal automation tools. By combining the strengths of both paradigms, these technologies have the potential to deliver powerful and versatile AI-driven tools,” Mayur Kamat - Head of Product, Binance, told Economy Middle East.
As a first step, the model needs a massive amount of text to be fed into its system. This data serves as the foundation for the AI agent to acquire human-like reasoning and generate text accordingly.
The pricing is based on token usage. “For some use cases, a pricing strategy based on token usage can absolutely be suitable and economically competitive. A good example is GitHub’s Copilot, which costs just $20 per month. Some tasks, such as text generation, summarization, image generation, video processing, etc., are relatively expensive right now,” Mayur indicated.
According to OpenAI, one token approximately represents four characters or 0.75 words. As a rough estimate, 1,000 tokens would equate to around 750 words.
The cost of usage is determined by two factors: the number of tokens employed as a prompt and the tokens present in the output. Pricing begins at $0.002 for 100 tokens. To use AutoGPT, you need to install a development environment like Docker, or VS Code. You also need an API key from OpenAI that requires a paid OpenAI credit account. The system extends a $5 credit with a three-month expiration period. Beyond that, you need a subscription with charges ranging between $0.002 and $0.12 per 1,000 tokens, depending on the specific model employed.
“Pricing based on token usage can provide huge cost cuts when compared to the same work done by a human. So yes, it is absolutely competitive,” Almiashev said. “However, in the coming years, many different LLMs like ChatGPT will compete against each other, and some of them will be free.”
By Steven Rees
Infrastructure, including utilities, telecom systems and other crucial components of modern society, is on the verge of a transformative period, and individuals have the opportunity to contribute to this process. While emerging economies require a range of essential services, particularly in rapidly growing cities, developed economies need to renovate aging infrastructure such as bridges and water utilities. Additionally, the transition toward a greener global energy future and the establishment of a more advanced and digitally connected society necessitate substantial construction efforts. However, the capital required for these infrastructure projects far exceeds the capacities of governments alone. For instance, experts predict that cities will need to add more than 2 million miles of power cables and over 4 million miles of water and sewage pipelines by 2050. This exemplifies why the private infrastructure market is poised for significant growth in the coming years.
Investing in infrastructure also offers the potential for strong returns. One key factor contributing to this is that infrastructure is not optional but essential, continuously required regardless of the state of the economy. Moreover, infrastructure investments, including real assets, typically have a different return pattern than stocks or bonds, making them valuable as uncorrelated diversifiers. Additionally, due to the link between utility rates and cost-of-living increases, infrastructure investments provide an implicit hedge against inflation.
Infrastructure investments offer a unique combination of benefits, including meaningful protection against inflation, portfolio diversification, consistent cash flow potential and historical outperformance during volatile periods. These opportunities are not easily found elsewhere in the investment landscape. The following reasons make an interesting case for investing in infrastructure.
With the global population projected to increase by 2 billion people by 2050, cities worldwide are faced with the pressing need to expand essential services such as clean water, energy, fiber-optic lines and transportation systems. This population growth, coupled with the increasing reliance on technology, will drive steady growth in digital infrastructure investments, creating a significant demand for networks and data centers.
In particular, the regional data-center market is heavily influenced by Saudi Arabia and the UAE, as these countries have implemented comprehensive economic transformation strategies. Their proactive investments in cloud computing, coupled with competitive business laws and robust technological infrastructures, have positioned them as dominant players in the market. Consequently, the information and communication technology sector is expected to continue its upward trajectory in the coming years.
The case for infrastructure investment is highly compelling, particularly considering its track record of relative stability. In 2022, when global markets experienced a steep decline of 17.7 percent and bonds fell by 11.2 percent, infrastructure investments remained resilient. Not only does infrastructure provide stability, but it also offers a reliable income stream and, on occasions, significant returns for those willing to prioritize long-term investments over immediate liquidity. These attractive qualities have drawn the attention of private investors, and we anticipate that valuations for infrastructure assets will continue to benefit from ongoing inflows of capital.
Regardless of whether this year brings a recession, slower economic growth or continued rate increases
by central banks to combat inflation, we expect to see persistent market dislocations.
Inflationary conditions, in particular, present an opportunity for utilities within the infrastructure sector. Utilities have the ability to pass on cost increases to customers through various mechanisms, making them an appealing source of income for investors. Specifically, investors may want to focus on infrastructure assets that offer contracted, regulated, and inflation-indexed income.
Furthermore, core infrastructure investments have historically performed well throughout economic cycles, demonstrating their resilience against market and economic shocks. This resilience can help mitigate the impact of such shocks on investment portfolios, ensuring consistent cashflow returns from these “essential” assets.
There is a global push to replace fossil fuels with renewable energy, and this transition extends beyond a few specific industries like transportation, automotive, and manufacturing. One crucial area that requires decarbonization is electricity generation, which may incur higher costs than what headlines often suggest.
Renewable energy is gaining momentum in the Middle East as well, with countries increasingly focused on boosting their renewable energy capacity. For instance, Saudi Arabia has set a target, as part of its Green Initiative, to generate 50 percent of its power from renewable sources
by 2030. Similarly, the UAE’s Energy Strategy 2050 aims to achieve 44 percent utilization of renewable energy, with a particular emphasis on solar power.
To achieve their net-zero goals by 2030, economies worldwide will need to see exponential growth in wind-power capacity, solargeneration capacity, and notably, battery-storage capacity. This shift demands substantial investment, with global forecasts estimating a requirement of $750 billion per year. Consequently, a wide range of private market opportunities arises, spanning from venture capital investments in breakthrough technologies to later-stage buyouts focusing on well-established and successful enterprises across all sectors of infrastructure.
Overall, investing in infrastructure not only provides avenues for sustainable investing but also presents significant growth opportunities. As regional governments prioritize the development of digital, energy, and construction industries, private investors have the chance to contribute to these long-term economic goals. Envisioning and constructing the future can be both exciting and profitable for all involved.
Dubai International Airport, the world’s busiest, is expecting a rise in passenger numbers in 2023 as it hosts the COP28 climate summit. Organizers say they expect more than 140 heads of state, senior government officials, 80,000 delegates, and 5,000 media professionals to attend the summit to be held from November 30 until December 12.
In the two decades since Dubai established itself as an aviation hub, other regional capitals have followed. In 2022, Dubai handled 66 million passengers in 2022, Abu Dhabi’s new terminal served 15.9 million passengers, and Doha’s
terminals welcomed 36 million travelers, partly due to the World Cup. Riyadh is also preparing for expansion, with Saudia ordering 121 planes and a new national airline being launched. Regional cargo traffic, also a growing business, is not reflected in passenger numbers.
While Middle Eastern aviation has experienced significant growth, carbon emissions from the sector will need to be managed to align with net zero targets. Despite some efforts to use sustainable aviation fuels, the current reliance on jet fuel and insufficient alternatives calls for urgent action.
The transition to sustainable aviation fuels (SAF) is in its early stages, with limited availability and scalability. The majority of commercial aircraft still rely on jet fuel, and claims of sustainability by some airlines have been criticized as “greenwashing.” International carriers like Abu Dhabi’s Etihad and Lufthansa have faced censure for unsubstantiated environmental claims. Policymakers at COP28 must address the challenge of reducing CO2 emissions from burning jet fuel. While scaling up electrification has shown promise in road transport, SAF requires significant volume expansion and cost reductions to meet industry needs.
The International Energy Agency reports that aviation accounted for over 2 percent of energy-related CO2 emissions in 2021 as the world emerged from the Coronavirusinduced lockdowns of 2020. Furthermore, there are currently no commercial flights that operate at net-zero emissions, even with experimental biofuel and jet kerosene blends. Carbon offsets are offered to environmentally conscious passengers, allowing them to “compensate” for their flight’s CO2 emissions by “planting trees,” for example, as proposed by the Aviation Environment Federation. However, the efficacy of carbon offsets in guaranteeing carbonneutral flights remains questionable. While Emirates Airline conducted a test flight using sustainable aviation fuel in January 2023, the lack of sufficient SAF volumes poses a significant challenge to the decarbonization effort.
The Gulf region’s aviation industry faces the challenge of maintaining growth while adhering to stricter sustainable aviation fuel mandates, including the European Union’s proposed legislation through the REFuelEU Aviation initiative. The International Energy Agency estimates
that global demand for jet kerosene will account for 57 percent of projected demand growth of 2 million barrels per day in 2023.
In the Middle East, jet kerosene demand has surged by 90,000 bpd due to the region’s major international aviation hubs surpassing prepandemic air traffic levels, the IEA said in its May Oil Market Report (OMR). It expects total regional oil demand to rise by 190,000 barrels per day in 2023 of which 80,000 barrels per day would be from jet/kerosene and 50,000 bpd from gasoline.
While new aircraft designs have improved fuel efficiency, they have not kept pace with the growth in air travel. According to the IEA, fuel efficiency improved by 2.4 percent in the period 2000-2010 and by 1.9 percent from 2010 to 2019, “demonstrating that additional incremental improvements are becoming more difficult.” the growth in passenger numbers during the same period means that the improvements are “far below what is needed to align with the Net Zero Scenario.”
The aviation manufacturing industry has also faced supply chain issues and rising costs of raw materials due to geopolitical conflicts. Airlines also took a beating during the pandemic as videoconferences curbed business travel and they are now having to contend with higher fuel costs. Achieving decarbonization in aviation is a long-haul journey that requires political will and government support. Existing infrastructure at airports will also need to be adapted to handle new types of fuel. The EU’s proposed sustainable aviation fuel mandates offer clarity to the industry but also pose potential cost challenges. These mandates aim to decarbonize the aviation sector by progressively increasing the blending of sustainable aviation fuels with kerosene from 2025 to 2050, starting at 2 percent SAF and reaching 70 percent by 2050. According to the EU Commission, “this measure on its own is projected to reduce aircraft CO2 emissions by
around two-thirds by 2050 compared to a ‘no action’ scenario, and provide climate and air quality benefits by reducing non-CO2 emissions.”
The sustainable fuels covered by these rules include biofuels, recycled carbon fuels and synthetic fuels such as e-kerosene, produced using captured CO2 and hydrogen. However, the utilization of such fuels remains largely untapped, representing only 0.05 percent of total jet fuel consumption. This emphasizes the urgency and scale of the challenge at hand.
To meet net zero targets and address the environmental concerns, the Middle East’s aviation industry must prioritize research and development of sustainable aviation fuels. Collaboration between governments, airlines and fuel suppliers is crucial to scaling up production and ensuring the availability of sufficient volumes of SAF. Additionally, investment in research and technological innovation is necessary to explore alternative propulsion systems and aircraft designs that reduce carbon emissions. At COP28, policymakers and industry leaders must engage in constructive dialogue to develop strategies for sustainable growth in the aviation sector. This includes exploring partnerships with renewable energy companies, incentivizing the production of SAF, and establishing international standards and regulations to accelerate the adoption of sustainable aviation practices. The significant growth of Middle Eastern aviation must align with tougher net zero targets to combat climate change. The industry’s heavy reliance on jet fuel and the lack of viable alternatives pose challenges in achieving sustainability goals. The Middle Eastern aviation sector, alongside global stakeholders, must prioritize investments in research, development, and infrastructure to transition to sustainable aviation fuels and technologies. Coordinated efforts, supported by political will and government initiatives, are essential to steer the industry toward a net zero destination and ensure a greener future for air travel.
Given the global surge in pollution and growing concerns about climate change, economies worldwide are actively seeking strategies to minimize greenhouse gas emissions. The transportation sector, which accounts for approximately 17 percent of global greenhouse gas emissions, stands as the fastest growing contributor to this issue, second only to the power sector. Consequently, countries, including the UAE, are actively exploring innovative solutions and alternative energy sources to power vehicles.
A significant portion of these emissions can be attributed to the expansion of last-mile delivery and road transport, particularly in the UAE. The country’s last-mile delivery market is primarily driven by e-commerce, with a particular emphasis on online food delivery. In today’s era, customer satisfaction heavily relies on the convenience
of dependable and swift online deliveries, which often involve the use of motorcycles, cars and other gasolinepowered vehicles.
Statista reports that the UAE’s online food delivery market, encompassing meals and groceries, is projected to witness an annual growth rate (CAGR 2023-2027) of 14.90 percent. This growth is expected to result in a market volume of approximately $3.36 billion by 2027.
This rapid growth in e-commerce has driven the UAE to dedicate significant efforts toward adopting electric mobility as a new transportation method to combat emissions. The nation has undertaken various initiatives, such as the construction of electric-powered aircraft and passenger drones, as well as the installation of public “Green Chargers” for electric vehicles. Additionally, Dubai aims to transform all
taxis into 100 percent eco-friendly vehicles (hybrid, electric and hydrogen-powered) by 2027, positioning the UAE as an emerging hub for electric transport innovation. Amid these advancements, the local last-mile delivery sector also plays a crucial role in reducing emissions through the adoption of electric mobility.
EVs offer numerous benefits in terms of emissions reduction and supporting the growth of the last-mile delivery market in the UAE. With rechargeable batteries replacing traditional fuel sources in EVs, these vehicles are inherently more environmentally friendly, emitting either zero or limited amounts of greenhouse gases during operation.
Estimates suggest that the UAE’s last-mile delivery market is home to over 63,000 gasoline-powered motorcycles, which cover an average distance of approximately 275 km per day. Considering that each motorcycle consumes around 2.5 liters of fuel to travel 100 kilometers and emits approximately 2.16 kg of CO2e (Carbon Dioxide equivalent*) per liter of fuel, it can be deduced that each motorcycle would require approximately 7 liters of fuel to cover a daily distance of 275 km. Consequently, each motorcycle would contribute approximately 15.12 kg of CO2e emissions per day.
When we consider the total number of motorcycles (63,000), the collective emissions amount to approximately 347,684 tons of CO2e annually. Moreover, estimates indicate that it takes between 31 and 46 trees to offset 1 ton of CO2e emissions. This implies that the UAE would need approximately 10.8 to 16 million trees each year to compensate for the emissions produced by gasolinepowered motorcycles. This task poses a significant challenge for any nation.
An ideal solution for last-mile delivery fleets would be to transition to electric motorcycles. These motorcycles offer several advantages, including lower lifetime costs resulting from reduced maintenance requirements and independence from fluctuating fuel prices. Furthermore, when combined with artificial intelligence, delivery routes can be optimized, resulting in faster deliveries and reduced time spent on the road per delivery. This optimization leads to lower emissions per delivery, contributing to environmental sustainability.
In addition to these benefits, EVs in general are highly fuel efficient, utilizing approximately 77 percent of the electric energy supplied to power the wheels. This is a significant improvement compared to conventional gasoline vehicles, which only convert about 12-30 percent of the energy stored in gasoline. The combination of fuel efficiency, high maneuverability and small carbon footprint makes electric motorcycles an ideal choice for last-mile delivery operators who aim to minimize emissions and environmental impact. Nevertheless, electric motorbikes and vehicles in general face their own set of unique challenges. While electric vehicles have significantly lower emissions over their lifetime compared to conventional vehicles, there are uncertainties surrounding emissions related to vehicle battery production and the electricity used to recharge the batteries. This is because nations relying on renewable energy sources
tend to result in lower emissions from EV production and charging compared to nations heavily dependent on nonrenewable energy sources like coal and oil. Fortunately, UAE has already taken steps toward decarbonizing industries and energy production. As the 8th ranked country globally in terms of electric mobility readiness, the UAE is well positioned to reduce emissions from electricity used for EV charging, especially for lastmile deliveries. This can be achieved through continued innovation in public infrastructure and initiatives that leverage renewable energy sources.
Similar environmental uncertainties also arise regarding the battery materials used in electric vehicles. While lithium-ion batteries offer a less toxic and longer-lasting alternative to lead-acid batteries used in conventional gasolinepowered vehicles, the retired batteries from EVs need to be repurposed and recycled once their capabilities are fully depleted. Otherwise, last-mile operators may incur more indirect emissions if the batteries are disposed of incorrectly. Innovative solutions are being explored, such as batteryswapping concepts, where drivers can exchange discharged batteries with fully charged ones at designated swapping stations. This approach not only contributes to reduced emissions but also helps alleviate range anxiety. However, implementing a comprehensive and interconnected electric ecosystem of swapping stations to facilitate this concept presents a significant challenge. Overall, electric mobility holds tremendous potential to transform the last-mile delivery sector sustainably and reduce overall industry emissions. However, it is crucial to pair it with supporting initiatives such as robust EV infrastructure and a comprehensive supply chain and disposal process to ensure minimal environmental impact. The UAE is already making strides in this direction by electrifying government and public transport and increasing its greenhouse gas emission reduction target from 23.5 percent to 31 percent by 2030 across five priority sectors, including transport. As operators in the last-mile delivery sector prioritize sustainability, cost reduction and alignment with the nation’s strategic net-zero vision for 2050, electric mobility is poised to become increasingly prevalent.
“Pacta sunt servanda,” which means “agreements must be kept,” is a fundamental principle of law in both common and civil jurisdictions. This principle indicates that agreements should be binding for the signatory parties and executed in good faith. When a party fails to comply with its contractual obligations or acts in bad faith toward the other party, the latter should be entitled to compensation.
Article 246 of Federal Law No. 5/1985 on the Civil Transaction Law adopted this principle. According to this law, “the contract shall be implemented according to the provisions contained therein and, in a manner, consistent with the requirements of good faith.” Additionally, Article 267 of this law asserts that neither party has the right to revoke, modify or rescind a valid and binding contract outside of mutual consent, court order, or provisions of the law.
Prior to the issuance of Federal Decree-Law No. 33/2021 on the Regulation of Labor Relations (New Labor Law), which came into effect on February 2, 2022, an employee who had their employment agreement terminated by an employer without just cause was entitled to compensation of up to three months’ salary. However, the introduction of the New Labor Law caused confusion regarding when an employee is entitled to compensation in the event of termination, as Article 47 of the New Labor Law states that an employer’s termination of an employment agreement is considered “illegal” if it is due to the employee filing a serious complaint with the Ministry of Human Resources and Emiratization (MOHRE) or filing a valid claim against the employer. The term “arbitrary dismissal” was replaced with “illegal termination” under the New Labor Law, and the scenarios
in which an employee is entitled to compensation were limited to the two situations stipulated in Article 47. These scenarios were only mentioned as examples of arbitrary dismissal under the previous labor law. In addition, the New Labor Law grants both the employer and the employee the right to terminate the employment agreement individually. Paragraph 3 of Article 42 states that “the employment agreement shall be terminated at the request of either party.”
However, due to the wording of Article 47 as mentioned above, onshore Courts in the UAE are refraining from awarding employees any compensation in cases where the employer terminates the employment agreement outside the two scenarios stipulated in Article 47. As a result, employees will not be able to obtain compensation through the courts in cases where the employer acts in bad faith to terminate the employment relationship. It is important to note that the New Labor Law only applies to the private sector, which includes entities fully owned by individuals or jointly with federal or local government, as well as entities wholly owned by federal or local government unless their establishment laws stipulate that they are subject to the provisions of another law. This law applies equally to both nationals and foreigners. However, it should be noted that the New Labor Law does not apply to employees of federal and local government entities, members of the armed forces, police and security personnel, and domestic workers. In an employment relationship, the employee is often considered the weaker party and may agree to the terms of the employment agreement as imposed by the employer. As a result, employees are worthy of legal protection. However, in practice, employees
may be hesitant to seek recourse through MOHRE or Courts while their employment agreement is still in effect. Therefore, we recommend that the New Labor Law be amended to grant UAE onshore Courts greater discretion in examining cases of early termination by employers, particularly in situations where such termination is deemed abusive. This would provide employees with better legal protections and compensation in cases of arbitrary dismissal.
In a rapidly evolving business landscape, the Kingdom of Saudi Arabia is actively transforming its economy and attracting international investments through a series of strategic measures. From the introduction of the New Companies Law to the opening up of the real estate market and the establishment of special economic zones, the Kingdom is taking significant steps to diversify its economy, promote sustainability and create a business-friendly environment. This brief exploration sheds light on the new company-formation requirements, visa applications and the anticipated impact of these developments on the business landscape in Saudi Arabia.
The real estate market in Saudi Arabia is one of the most rapidly expanding and dynamic in the world. The country’s strategic location, budding business environment, stellar infrastructure and social transformation have made it an increasingly attractive destination for foreign investment and tourism. In November 2022, real estate transactions in Saudi Arabia had increased by 6 percent from the previous year. As part of the Saudi Vision 2030 initiative, the Kingdom’s economic diversification plan aims to build millions of housing units worth billions. This focus on the real estate sector will aid significantly in diversifying income and shifting the economy away from its heavy reliance on the oil and gas industry, improving sustainability, well-being, and environmental friendliness.
It is anticipated that foreign nationals may be eligible to purchase property in Saudi Arabia both as individuals and through corporate entities. Previously restricted to foreigners, ownership of commercial, residential and agricultural properties will likely be permissible anywhere in the Kingdom. Managing a property as a corporate entity, in particular, may be easier if purchased as part of a larger investment portfolio or as a commercial real estate venture.
Enabling foreigners to own property in Saudi Arabia could create more opportunities and incentives for foreign businesses. Business owners may consider making Saudi Arabia their long-term investment home base, which could indirectly increase demand in various economic sectors as the population grows.
By 2030, Saudi Arabia is projected to become the largest construction site in the world, featuring over 555,000 homes, 275,000 hotel rooms, 4.3 million square meters of new retail space, and 6.1 million square meters of new office space.
In January 2023, the Kingdom of Saudi Arabia announced the publication of the New Companies Law, which will regulate all types of entities operating in the Saudi market, including commercial, non-profit, family-run and professional businesses, all of which will fall under this comprehensive law.
Companies operating in the Kingdom will have a two-year grace period to comply with the new regulations. While there have been no significant changes to the business landscape in Saudi Arabia since the introduction of the new law, it serves as a precursor to the upcoming changes in the business ecosystem.
The key features of the New Companies Law are centered around flexibility and protection of companies, with an emphasis on empowering the private sector to keep up with international best practices and standards.
Saudi Arabia has Double Taxation Treaties with over 50 countries from all over the world, which signifies its growing international business relationships. For businesses expanding operations from the UAE to the Kingdom, there is a KSA-UAE Tax Treaty, which centers around Permanent Establishments (PE). A PE is a fixed business location where enterprises carry out operations, partially or fully, including management, branches, offices, factories, workshops and more.
The Tax Treaty recognizes two additional categories of PE, including Construction and Service PEs. A Construction PE relates to construction or building sites, or an installation project that lasts for six months or more (or 12 months, as per the Organization for Economic Cooperation and Development Model). On the other hand, a Service PE involves the presence of employees on the ground who
render services to the parent company for a period of 183 days or longer within 12 months.
Saudi Arabia has recently announced four new special economic zones, located in Riyadh, Jazan, Ras Al-Khair and King Abdullah Economic City (KAEC), which aim to open up new opportunities to international investors and entrepreneurs. The Economic Cities and Special Zones Authority will be the regulating body for the new zones.
These special economic zones are designated areas that facilitate specific economic activities, such as trade and investment, by providing advantages and legal frameworks that differ from those of the base economy. The aim of establishing the four special economic zones is to create business hubs for growing key sectors and enabling their continued expansion and future growth. These zones are aligned with other national strategies and linked with international frameworks to support key sectors and position the Kingdom as a global investment destination. The expected impact of these zones on the Kingdom’s economy is significant, as they are projected to create thousands of jobs, localize supply chains, and contribute billions to the gross domestic product (GDP).
The companies operating within these zones can benefit from corporate tax rates, custom duties exemptions on imports, 100 percent foreign ownership, and other benefits. The four zones will cover a wider range of differing industries, with KAEC being the destination for manufacturing and logistics, Jazan as an industrial center for trade of resources, Ras Al-Khair for the maritime industry, and the Cloud Computing special economic zone, located in King Abdulaziz City for Science and Technology, acting as a hub for emerging digital technologies.
It is evident that the new special economic zones will generate an attractive environment, akin to the thriving commercial growth observed in the free-zone areas of the UAE. These multifaceted and innovative centers will provide prospects for knowledge sharing, talent acquisition and human capital enrichment for businesses setting up in these zones. This expansion is a rational move towards the Kingdom’s pursuit of being competitive in luring international investment.
Saudi Arabia’s recent initiatives, including the implementation of the New Companies Law, the opening up of the real estate market to foreign ownership, and the establishment of special economic zones, demonstrate its commitment to attracting foreign investment and fostering a competitive business environment. These measures will drive economic diversification, create job opportunities and contribute to the Kingdom’s overall growth. As Saudi Arabia continues to adapt to global trends and embrace innovation, it is poised to become a leading destination for international businesses seeking a vibrant and dynamic market.
Greg Hastings, Head of Corporate Structuring and Compliance, PRO Partner GroupThe Middle East, particularly the Gulf region, is gaining quite the reputation as a playground for the affluent and wealthy. It has become synonymous with opulence and extravagance, boasting remarkable attractions such as the world’s first and, thus far, only 7-star hotel, as well as a fleet of flashy supercars gracing the roads of Dubai and Riyadh. Consequently, the region has emerged as the premier destination for high net worth individuals (HNWIs) from around the world. What lies ahead for the rich and affluent? It appears that the next frontier in luxurious living for this elite segment involves indulging in branded residences, with Dubai spearheading this trend as the global leader in residential enclaves associated with premium brands, according to a report published by Savills.
By the end of 2022, Dubai boasted a total of 71 branded properties, and an additional 42 projects in the same exclusive category are currently under construction. Meanwhile, The Red Sea Project in Saudi Arabia recently unveiled its first branded residences at Nujuma, A Ritz-Carlton Reserve, marking the brand’s entrance into the region.
The demand for and value of these branded residences is exceptionally high. According to Savills’ recent report titled “Spotlight on Branded Residences,” Swapnil Pillai, Associate Director of Research & Advisory, explains, “Brands have rapidly expanded into other global regions, particularly in Asia Pacific and the Middle East, fueled by economic growth and the rise of domestic wealth over the past decade.”
In Dubai alone, sales from branded residences reached an impressive AED25.4 billion in 2022, as highlighted in a Knight Frank report on the branded residences market. This not only underscores the substantial demand for these premium units but also emphasizes their inherent value.
Several notable branded residences projects have recently been launched in the market, further cementing Dubai’s status as a hub of luxury living. One such project is the Bugatti Residences, a collaboration between Binghatti and the renowned French luxury car brand. Other notable projects include the Mag of Life Mansions at the Ritz-Carlton Residences, Creekside, and Jumeirah Living Residences Business Bay, which is slated for completion in Q4 of 2025.
DAMAC, a trailblazer in branded residences within the region, made its mark in Beirut by introducing branded residential living in collaboration with Versace Home back in 2010. Expanding its already impressive portfolio, the company has embarked on a new venture with the development of Cavalli Tower, a magnificent 70-storey project currently being built in Dubai Marina. This ultra-luxury endeavor, now under DAMAC’s ownership, will boast interiors designed by the prestigious Italian fashion house Roberto Cavalli.
“Interest in branded residences has grown in strength in recent years, with the rise of a more sophisticated clientele, and with homeowners expecting superior levels of service and facilities. DAMAC has embraced this trend and implemented it in our project development as we have witnessed a fair share of interest in this segment. We have observed that the winning formula for the demand to soar high is the combination of the allure of luxury living in a safe and secure city like Dubai, and the essence of trusted global brands. We believe that growing with the times and catering to the needs of today’s customers have been our biggest strengths since we began operations in 2002. We will continue to understand the pulse of our customers and create homes and projects that satisfy our investors completely,” explains
Niall McLoughlin, senior vice president of DAMAC, which has now brought its winning formula overseas with its DAMAC Tower Nine Elms, the first branded residences by global luxury leader Versace in Europe.
While owning a residence with a luxury brand affiliation is already seen as a wise investment, industry experts suggest that branded residences are generating even higher demand due to the exceptional lifestyle they offer to end-users. These residences provide a sense of assurance, if not an expectation, of top-notch services and extraordinary amenities. For investors, the association with a prestigious brand allows them to leverage its reputation for rental income or selling at premium prices.
From the perspective of property developers, collaborating with a luxury brand can serve as a crucial differentiator in an increasingly competitive market that includes both branded and non-branded residential projects. Moreover, developers view the customer base of luxury brands as a potential captured market for their joint developments.
According to Pillai, “In a highly competitive residential market, branded residences offer a point of difference. Brands bring design expertise and marketing benefits that help widen the customer base and achieve potential price premiums. Dubai benefits from a healthy mix of projects from global brands along with a sizeable number of projects from domestic players such as Emaar, bringing to the market a range of diverse offerings.”
With the success of these brand associations, we can anticipate more collaborations entering the market, introducing concepts and features that elevate the standards of luxurious living. Additionally, as more affluent individuals adopt mobile and remote lifestyles, the market for branded residences is expected to expand not only in the Middle East but also globally.
Less than a decade ago, envisioning a Ferrari with an electric engine silently cruising down the motorway would have seemed implausible. However, the all-new Ferrari 296 GTS defies expectations, effortlessly combining a powerful 830 bhp engine with serene silence. It glides with the grace of a horse’s gait or prances boldly, as only a Ferrari can. The Ferrari 296 comes in two versions: the GTB (Gran Turismo Berlinetta), a hardtop model, and the GTS (Gran Turismo Spider), featuring a retractable hardtop. Economy Middle East had the opportunity to test the 296 GTS, the first-ever Ferrari Spider with rear-wheel drive and a Plugin Hybrid engine. This engineering marvel exemplifies the future of the automotive industry. The engineers at Maranello have skillfully blended internal combustion and plug-in hybrid technologies to preserve the essence of a true supercar while embracing a V6 engine. Some enthusiasts argue that this achievement places the 296 GTS among the most thrilling cars of the decade. Undoubtedly, the 296 GTS will be remembered as a pioneering icon. Throughout its illustrious 76year history, the revered Italian marque chose to reserve the Ferrari badge for its larger engines, designating the smaller six-cylinder engines with the esteemed “Dino” emblem. These sports cars, named after founder Enzo Ferrari’s son, were manufactured by Ferrari from 1957 to 1976, spanning almost two decades. Proudly featuring the first-ever V6 engine in a production Ferrari Spider, the 296 GTS pays homage to this legacy while propelling the brand into the future.
The 296 GTS features a turbocharged internal combustion, 3-litre V6 engine, elegantly combined with a plug-in hybrid system. The petrol engine generates an impressive 663 bhp, while the plug-in hybrid contributes an additional 167 bhp. Together, they deliver a staggering total of 830 bhp, producing
a symphonic sound reminiscent of a mighty V12. With such power, the 296 GTS firmly establishes itself in the realm of supercar royalty.
This exceptional vehicle incorporates advanced technologies to effectively distribute power at the right moments. The power is transmitted to the rear wheels through the automatic 8-speed dual-clutch F1 DCT transmission. The car offers four drive modes: eDrive, Hybrid, Performance, and Qualify. These modes can be conveniently controlled through the innovative e-manettino located on the left side of the steering wheel, while the traditional analog manettino retains its position and function on the right.
When it comes to performance, the 296 GTS is truly breathtaking. It reaches an impressive top speed of 330 km/h. Acceleration from 0 to 100 km/h is achieved in just 2.9 seconds, and it can reach 0 to 200 km/h in a mere 7.6 seconds. The version we had the pleasure of driving was equipped with the Assetto Fiorano package. This package includes Multimac shock absorbers optimized for track performance, high downforce carbon fiber appendages on the front bumper, a lightweight Lexan rear screen, and extensive use of lightweight carbon fiber materials both inside and outside the vehicle.
We were first introduced to Ferrari’s digital interior design language in the beautifully appointed Roma. Now, with the 296 GTS, they have taken it to the next level, incorporating hints of the SF90. The gauge cluster boasts a fully digital interface, offering excellent visibility and easy navigation. Gone are the center console and separate infotainment system, as all functions are seamlessly integrated into the digital gauge cluster. Overall, the interior is sleek and uncluttered, with a minimal number of buttons. The air conditioning controls and the retro styled shifter, reminiscent of the gated manual Ferrari gearboxes, are the only buttons present. The passenger side also features a digital screen capable of displaying various information, including G-force measurements.
While the luxurious leather seats are undeniably sporty, they may prove to be somewhat snug for individuals taller than 1.85 cm.
Moving on to the exterior, the 296 GTS exudes a sporty, sleek, and elegant appearance, showcasing the best of all worlds when the roof is deployed. Our particular car was equipped with the Assetto Fiorano package, emphasizing its track-focused nature, which is also reflected in the redesigned elements such as the door panels and the LaFerrari-inspired active rear bumper. Furthermore, buyers have the opportunity to choose from a range of unique bespoke color options.
When the roof is retracted inside the engine compartment, the 296 GTS captivates onlookers with its impressive open-top styling, making it an absolute joy to drive whether you’re conquering the mountain roads of Segesta in Sicily or cruising down the E311 to Fujairah.
The Ferrari 296GTB is an extraordinary paradigmshifter, representing an iconic masterpiece of mechanical excellence, seamlessly blending internal combustion and hybrid technologies into a remarkable fusion. With the aid of cutting-edge advancements, this vehicle is poised to etch its name in the annals of history as the V6 that exudes supercar performance with unparalleled precision.
