Gulf countries are poised to make big gains this year, thanks to investment opportunities abroad. And their impact on the world - and sustainability - could be huge.
After seeing a collective fall of 6% of GDP, the IMF has predicted that the Gulf countries will see economic growth to the tune of 2.3% over the next 12 months. The reopening of trade and commerce, as well as the reopening of economies, is looking quite promising for the region, since the arrival of the many vaccines designed to inoculate the Arab population. Combined with the rise of crude oil prices, Gulf countries are poised to continue their economic diversification, which will only accelerate as time goes on.
Investors seem keen on this going forward, as transportation, trade, technology, health, tourism, and renewable energy sectors continue to attract the eyes of foreign investment funds. The regional sovereign wealth funds have also continued to play sharply in the markets, scooping up shares of companies whose stock prices have fallen as a result of the pandemic. This means that shrewd investments will lead to a higher valuation once these stocks regain their footing. Saudi Arabia’s Public Investment Fund is estimated to grow from $400 billion to more than $1 trillion by 2025, thanks to targeted investments and the privatization of Saudi Aramco. Through this, 70% of its investments are poised to go into the national economy, at a clip of $40 billion per year. Gulf country sovereign wealth funds are increasingly looking at tech companies and startups. The Abu Dhabi Investment Office recently opened eight new offices, with the Abu Dhabi Investment Authority increasingly targeting tech companies and startups. The Saudi PIF has invested $1 billion in California-based electric car maker Lucid – and has entered into talks to open a plant near Jeddah.
New Investments Lead to a Cleaner World
The new investments into sustainable commodities and technologies is poised to change the world. Dubai is set to be the world’s largest producer of “solar aluminum”, for example. Normally in countries without much hydroelectric capability, aluminum – which requires a lot of energy to produce – would be produced using carbon-emission producing power plants, which in large part contributes to the release of CO2 emissions. The country has just entered into agreement with local manufacturers to switch to solar panels, which would produce more than 40,000 tons of aluminum per year while completely eliminating the greenhouse gas emissions normally associated with its production.
The 2020s are poised to be promising for the Gulf countries, with positive ramifications for the entire world in the next few years should they succeed!