Conference Presentation, Panel
Morning Program - Opportunity in the Middle East: A Road Less Traveled
Milken InstituteMichael Clowden, John Riccolta, Mina al-Arabi, Khaled El-Romehi, Mohamed El-Ardi, Abdullah Zamil
- The Milken Institute Index is projected to focus on the GCC region this year to assist international investors, with specific reports on "Power Rain" and financial technology development anticipated as useful resources.
- Saudi Arabia is expected to host the G20 presidency and Dubai to host Expo as key regional moments, contributing to a broader outlook where the GCC picks up growth next year after accumulating 2.5% growth this decade.
- A transition to a knowledge-based economy is predicted for the UAE within 10, 20, and 50 years as oil and gas cease to be dominant, requiring a workforce shift from its current 3 million blue-collar workers to white and gray collar roles over a slow, gradual period.
- The oil industry faces potential disruption in the coming 20 to 30 years comparable to the early 20th-century pearling industry, with oil prices projected to stabilize between $40 and $60 per barrel due to US shale and technological impacts.
- Population demographics in the GCC will remain young with almost 60% under 30 years old, while urbanization levels exceeding 80% (compared to a global average of 50%) will create pressure to build future-proof infrastructure.
- Vision 2030 transformations in Saudi Arabia are expected to face short-term difficulties before improving as the private sector adapts to new regulations such as VAT and expat levies.
- Cement sales in Saudi Arabia are forecast to increase by 24 to 25 percent toward the end of 2019, coinciding with a non-oil purchasing manager index reaching its highest level since 2015.
- The "Amra Plus" program is expected to generate an annual opportunity for 30 to 40 million visitors for Hajj and Umrah, potentially helping to reduce youth unemployment rates from 12.7% to 12%.
- Telecom industry growth in Bahrain is projected to reach 70% following deregulation, accompanied by a 50% drop in consumer prices.
- The GCC is expected to position itself between the US and China to leverage the Belt and Road initiative and US innovation, though investors may need to "unlearn the past" to adapt to new economic conditions.
- Capital is expected to flee if governments tax too aggressively; consequently, pushing non-oil income through taxation is viewed as a dangerous move that should be replaced by spending rationalization and corruption reduction.
- Retail, tourism, and manufacturing are expected to create thousands of jobs, though there is an emphasis on developing long-term employment in sectors like manufacturing rather than just short-term roles.
- Private sector involvement is anticipated to increase in education, healthcare, and "healthcare tourism" as governments pull back, with private investment expected to follow public initiatives in unoccupied areas like tourism and NEOM once infrastructure is established.
- A "slow and gradual transition" to a more competitive environment is necessary to attract Foreign Direct Investment, requiring the state to be willing to sacrifice national companies for the sake of competition.
- Cultural changes, including the introduction of music and theater in schools, are expected to likely alter perspectives on family and global relations, though social changes are not anticipated to "die down."
- The transformation process is expected to take time, with governments requiring a couple of years to transition themselves while maintaining the private sector, and rewards for investing in GCC states are historically viewed as higher than the risks of geopolitical disruption.