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Khaleej Times
2 days ago
- Business
- Khaleej Times
UAE emerges as resilient FDI hub amid GCC slowdown
Foreign Direct Investment (FDI) flows into the GCC region are expected to experience a slowdown in 2025 following a decade of sustained growth, but the UAE is expected to buck the trend and remain a regional bright spot. The tempered outlook reflects a confluence of global uncertainties — including evolving US trade policies, declining oil prices, and a more measured pace in the execution of GCC economic diversification projects, according to a new analysis by S&P Global Market Intelligence. The GCC, led by key economies such as the UAE and Saudi Arabia, has historically been a magnet for FDI, attracting capital with its resource-rich economies, stable currencies, and increasingly business-friendly regulatory environments. However, S&P's latest forecast underscores that geopolitical tensions, global economic adjustments, and sectoral realignments will moderate growth prospects over the coming year. Despite this overall cautionary outlook, the UAE is expected to buck the trend and remain a regional bright spot. Recent data from the United Nations Conference on Trade and Development (Unctad) indicates that the UAE was the second-largest recipient of FDI in the Middle East in 2023, garnering over $23 billion, up by more than 28 per cent year-on-year. The Emirates has leveraged its strategic location, progressive reforms, and focus on high-tech and green investments to stay ahead of its peers in the FDI race. S&P Global analysts suggest that the ongoing strategic competition between the US and China will continue to play out in the Mena region, offering opportunities for countries to attract capital from both economic giants. This rivalry is likely to result in a steady stream of bilateral deals, although no immediate shifts in strategy are expected despite high-profile visits and investment pledges. One mitigating factor that could cushion the regional slowdown is the recent weakness in the US dollar, which effectively lowers the cost of investment for non-dollar investors — especially from Europe, China, and India. Since most GCC currencies are pegged to the dollar, the depreciation enhances the external competitiveness of their economies. This stands in contrast to non-GCC nations like Morocco and Tunisia, whose appreciating currencies have begun to erode their investment appeal. Crucially, the nature of FDI inflows into the GCC has shifted decisively in recent years. Once dominated by the hydrocarbons sector, investments are increasingly targeting renewable energy, logistics, infrastructure, tourism, and advanced construction. For instance, the UAE has unveiled ambitious initiatives such as the Dubai Clean Energy Strategy 2050 and Masdar City, both aimed at boosting sustainability and clean-tech innovation. Abu Dhabi's ADIO (Abu Dhabi Investment Office) has also expanded its outreach to high-growth sectors like AgTech and advanced manufacturing. Beyond clean energy, the UAE continues to draw global technology firms, supported by its free zones, talent-friendly visa reforms, and digital infrastructure. In 2024, the UAE launched a new Unified Investment Platform, streamlining licensing and approvals across its emirates, further bolstering its attractiveness to international investors. Nevertheless, the broader regional picture remains mixed. Lower oil prices, driven by softening global demand and rising Opec production, have compressed the foreign exchange reserves of major oil exporters. This not only limits their ability to invest outwardly in the wider Mena region but also reduces fiscal room for further domestic diversification spending. S&P Global notes that while GCC countries will likely resort to increased sovereign borrowing to keep diversification efforts on track, the net effect on global FDI flows will remain negative in the near term. The ripple effects of US tariffs and trade tensions are already manifesting in investor sentiment, with risk-averse capital reallocations away from emerging markets. The UAE, however, continues to strengthen its resilience. In 2023, it signed comprehensive economic partnership agreements (CEPAs) with India, Indonesia, and Türkiye, expanding its trade horizons and enhancing its investment inflows. Additionally, its liberalized 100 per cent foreign ownership laws and golden visa program have been instrumental in positioning the Emirates as a regional headquarters for multinationals. According to analysts, GCC states like Saudi Arabia are pushing ahead with giga-projects under their Vision 2030 umbrella — most notably Neom and The Line — though timelines remain uncertain given the capital-intensive nature of these undertakings and rising global financing costs. In contrast, non-GCC Mena countries may face deeper challenges. While countries like Egypt, Morocco, and Tunisia continue to attract sector-specific FDI in tourism and renewables, structural issues — currency volatility, political uncertainty.
Khaleej Times
16-04-2025
- Business
- Khaleej Times
Middle East economic expansion defies global recession fears
The global economy teeters on the edge of a recession, with UN Trade and Development (Unctad) forecasting a mere 2.3 per cent growth in world gross product for 2025, below the 2.5 per cent threshold signalling a recessionary phase. The agency's latest 'Trade and development foresights 2025' report paints a grim picture of escalating trade tensions, unprecedented policy uncertainty, and disrupted supply chains triggered by President Donald Trump's tariff barrage. However, the Middle East emerges as a symbol of resilience, with Unctad projecting 3.2 per cent regional growth, driven by rising oil production and strategic economic policies, despite the ongoing Gaza conflict's ripple effects. However, the Middle East's economic buoyancy contrasts sharply with the global slowdown, which marks a significant deceleration from pre-pandemic averages. The UAE, a regional powerhouse and the Arab world's second-largest economy, is expected to grow by 3.8 per cent, per World Bank forecasts, driven by tourism, real estate, and financial services. Saudi Arabia, the largest Arab economy, leads the region with a projected 3.5 per cent expansion in 2025, fuelled by increased oil output under Opec+ agreements. The kingdom's Vision 2030 diversification efforts, including $1 trillion in non-oil projects, bolster growth, with the IMF estimating non-oil GDP growth at 4.5 per cent in 2024. Qatar's LNG expansion further supports the region's outlook, with a projected 2.8 per cent growth. Turkiye, straddling Europe and the Middle East, is forecast to achieve 2.9 per cent growth, propelled by monetary easing, robust public spending, and a competitive exchange rate boosting exports. Despite inflationary pressures — consumer prices hit 49 per cent in early 2025, per Turkey's central bank — export growth to the EU and Gulf states, valued at $260 billion in 2024, sustains momentum. However, the Gaza conflict, displacing over 1.9 million Palestinians and costing $20 billion in damages per UN estimates, casts a shadow, disrupting trade routes and investor confidence in neighboring Jordan and Lebanon. Unctad warns that global trade policy uncertainty, at its highest this century, is stifling investment and hiring. US tariff threats, including proposed 25 per cent levies on imports, have already disrupted supply chains, with global trade growth projected to slow to 1.8 per cent in 2025 from 2.5 per cent in 2024. The report highlights a surge in financial volatility, with the VIX index spiking to 25 in Q1 2025, reflecting investor unease. Developing nations, particularly low-income economies, face a 'perfect storm' of rising debt — global public debt reached $97 trillion in 2024, per the IMF — and deteriorating external financial conditions. The Middle East, however, benefits from its strategic role in global energy markets. Oil prices, though volatile at $65 per barrel (S&P Global estimate), support fiscal stability in GCC countries, where breakeven prices range from $55 (Qatar) to $85 (Saudi Arabia), according to Bloomberg Economics. Yet, prolonged trade disputes could depress demand, risking a further price drop that might strain fiscal balances. Unctad stresses the growing importance of South-South trade, which accounts for one-third of global trade, valued at $5.5 trillion in 2024. For the Middle East, intra-regional trade, particularly within the GCC, has surged, with non-oil trade among members rising 15 per cent to $150 billion in 2024, per GCC Statistical Center. Agreements like the UAE-India Comprehensive Economic Partnership, boosting bilateral trade to $85 billion, exemplify the potential of South-South integration. Turkiye's trade with GCC countries, up 20 per cent to $30 billion, further underscores this trend. Unctad calls for urgent dialogue and stronger regional coordination to counter global headwinds. In the Middle East, initiatives like the Arab League's Greater Arab Free Trade Area, covering 18 nations, aim to enhance intra-regional commerce, though political tensions hamper progress. The GCC's unified economic policies, including a planned customs union by 2027, offer a model for resilience. Globally, Unctad advocates for coordinated action to restore confidence, warning that without it, development goals, including the UN's 2030 Agenda, are at risk. The Middle East's 3.2 per cent growth projection for 2025 highlights its ability to navigate global challenges, leveraging oil wealth and diversification. Saudi Arabia's $800 billion in sovereign wealth fund assets and the UAE's $1.5 trillion in foreign investments provide buffers against volatility. However, risks persist: a deeper global recession or prolonged Gaza conflict could disrupt trade and investment flows. For now, the region's focus on South-South trade and domestic reforms positions it to defy the global downturn, offering lessons for other developing economies facing an uncertain future.
Zawya
16-04-2025
- Business
- Zawya
Kenyans, Ugandans gaining little from AI jobs despite high training
Despite being globally renowned suppliers of business process outsourcing (BPO) talent, Kenyans and Ugandans tapped to work in the AI industry often get low-skill and low-paying jobs, even though they are highly trained and skilled, discouraging the growth of talent in the sector. ChatGPT – one of the world's most famous artificial intelligence (AI) chatbots – was trained mostly by Kenyans, and new research now shows may also have contributed to 'deskilling' the youth due to a mismatch of qualifications. UN Trade and Development (Unctad) Technology and Innovation Report 2025 highlights the stark reality of AI workers in countries such as Kenya, Uganda and India, which are global leaders in BPO work. A recent survey on micro task platforms and BPO companies showed that in Kenya and India specifically, 'highly educated workers, with graduate degrees or specialised educations in science, technology, engineering or mathematics, were often relegated to relatively low-skill tasks such as text and image annotation and content moderation.' 'Such significant wastes of human capital may be exacerbated in increasingly connected job markets, in which tasks are outsourced globally,' Unctad warns in the biennial technology report.'Data annotators in developing countries often experience difficult conditions, including up to 10 hours of work per day at wages of less than $2 per hour, engaged in repetitive tasks, and with limited opportunities for career advancement, for example, in Kenya and Uganda.'Essentially, such jobs are eroding Kenya's rich tech talent, and edging out its competitive advantage in the increasingly growing global tech industry, further widening the technology gap and consequently the income inequality gap. Read: IMF: AI could worsen income inequalityDespite being highly trained and skilled in science, technology, engineering and mathematics, Kenyans struggle to find meaningful employment locally and internationally, forcing them to settle for the low-skill AI jobs offered by BPO companies. Over the years, Kenya has developed more tech talent and is now one of the countries with the fastest growth in developers in Africa and globally. Between 2022 and 2023, Kenya recorded the second fastest growth in the number of developers listed on coders platform Github at 41 percent, second only to Nigeria's 45 percent. Last year, Kenya posted the fastest growth in Github developers at 33 percent, pushing the total number of programmers in the country to over 393,000, the fifth highest in Africa after Nigeria, Egypt, South Africa, and Morocco. Also read: Jobs that will survive AI, and those that won'tThe country is also one of the top four tech start-up giants on the continent, a testament to leading in tech talent and innovation, but this has also been changing over time, with such start-ups starved of cash from investors forcing many of them to scale back operations or fold completely. Data from the African Venture Capital Association shows that last year, total funding raised by Kenyan start-ups declined by 33 percent to $318 million from $473 million in 2023. As a result, at least five start-ups closed down after failing to raise follow-up funding, leaving hundreds of talented Kenyans jobless amid tightening economic conditions and falling income. This came hot on the heels of similar scale-backs and shutdowns in 2023, which also left many in the country without jobs. To protect workers in the tech industry, Unctad proposes key policy changes that need urgent action by State organs.'Translating technological progress into shared prosperity requires labour-friendly policies in three stages: investments in education and skills, in pre-production; labour protection and worker empowerment, in production; and progressive taxation, in post-production,' the UN agency said in the report. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
The Guardian
14-04-2025
- Business
- The Guardian
UN calls on Trump to exempt poorest countries from ‘reciprocal' tariffs
The UN's trade and development arm, Unctad, is calling on Donald Trump to exempt the world's poorest and smallest countries from 'reciprocal' tariffs, or risk 'serious economic harm'. In a report published on Monday, Unctad identifies 28 nations the US president singled out for a higher tariff rate than the 10% baseline – despite each accounting for less than 0.1% of the US trade deficit. These include Laos, which is expected to face a 48% tariff; Mauritius, on 40%; and Myanmar, to be hit with 45%, despite recovering from a devastating earthquake. The White House shocked many developing countries with the punitive tariff rates announced this month. Trump claimed rival economies had 'looted, pillaged, raped, plundered' the US with unfair trade practices, and he wanted to create a level playing field. Unctad points out that many of the countries targeted with high tariff rates are unlikely to be a threat to the world's largest economy, given their small size and modest levels of exports. The White House last week put the higher tariff rates on pause for 90 days, after unleashing chaos on world financial markets, leaving a 10% levy in place across the board. But the administration's formal position remains that the 'reciprocal' tariff rates will come into force, subject to negotiations. 'The current 90-day pause presents an opportunity to reassess how small and vulnerable economies – including the least developed countries – are treated,' Unctad suggests. 'This is a critical moment to consider exempting them from tariffs that offer little to no advantage for US trade policy but risk causing serious economic harm.' Unctad's analysis points out that many of these economies are so small that they are likely to generate little demand for US exports, even if they lowered tariffs, as the White House appears to be demanding. Malawi, facing 18% tariffs, bought just $27m of US exports last year; Mozambique, which faces 16% tariffs, $150m; Cambodia, set for 49% tariffs, $322m. And Unctad's experts also point out that 36 of these small and poor countries are likely to generate less than 1% of total US tariff revenue, even if the US does not cut imports from them as the tariffs take effect. Part of the logic of the tariff policy is meant to be to bring manufacturing jobs back to the US. But for several tiny countries, their key exports are agricultural commodities, for which the US is unlikely to be able to find substitutes elsewhere – let alone develop a domestic industry. Unctad highlights the $150m in vanilla imported from Madagascar, close to $800m in cocoa from Côte d'Ivoire and $200m in cocoa from Ghana. With Madagascar set to face 47% tariffs, for example, the report argues that the main impact on the US is likely to be higher prices for consumers. Some of the countries hit by the 10% tariffs – and set to face higher rates when the pause is over – were previously beneficiaries of a US policy called the African Growth and Opportunity Act (Agoa). The scheme had been in place since 2000, and gave sub-Saharan African countries tariff-free access to US markets in order to encourage economic development. As many as 32 countries were eligible, before Trump's announcement appeared to tear up the scheme. Financial markets and manufacturers in developing countries are continuing to wrestle with the changeable nature of US trade policy. Trump sowed fresh confusion over the weekend by appearing to revisit an announcement made on Friday, that some hi-tech goods, including laptops, would be exempt from tariffs. In a post on his social media site Truth Social on Sunday, the president said no one was getting 'off the hook', and the administration would be investigating the 'whole electronics supply chain'.
