First MENA

MENA’s strength

There is still significant wealth in the Gulf States, which is being mobilized for many infrastructure projects has boosted demand for the MENA region’s building materials and construction sector. In addition, a number of infrastructure programmes which encompass transportation, education, healthcare and power and water projects to supply the region’s young demographics have also been speeded up, further increasing demand in certain sectors.

The economic outlook has been transformed in the MENA region. The energy-exporting countries – including the Gulf States, Libya and Algeria – have taken the volatility of oil and gas prices in their stride. Overall, real GDP growth is still expected to be positive, at a time when the rest of the world is experiencing slower growth, and even a contraction, in some cases.

Foreign Direct Investment has risen to unprecedented levels, targeting a myriad of services and manufacturing-related sectors in addition to non-traditional activities, some of which has also remained relatively stable.

Stronger economic frameworks in many emerging economies are helping to cushion the impact of this unprecedented external shock. Their growth is projected to remain at or above rates seen during previous global downturns.

World Bank report (January 2009)

Fast response

Many of the MENA region’s countries have demonstrated progress on reforms to improve the overall environment for economic growth, thorough monetary and fiscal reforms. Governments have been improving the macroeconomic framework, as well as their fiscal sustainability and performance. Almost all of the countries in the region have also taken significant steps to remove impediments to trade. Tariffs have been reduced throughout the region, from a simple average of 20% in 2000 to 13% by 2007, resulting in strong regional progress in trade reform and an increase in intra-regional trade.

The region’s capital markets also have responded to the changing situation, presenting new opportunities for investors o participate in what has been acknowledged as the world’s fastest growing economic region. The global downturn is affecting the region, but this region should be expected to outperform other regions’ economic growth.