Investment Opportunities in the Middle East

Despite the current overall state of the world, the GDP of Middle Eastern countries is still expected to grow by 4.6% in 2022. The EY Global Capital Confidence Barometer (CCB) showed that 71% of respondents believe that profit will return to the levels of pre-Covid.

The Middle East has been the leader in the crude oil sector for some time now. In 2020 alone, this region produced 27,664 barrels of oil per day. However, today, the governments are trying to set a different path and diversify their economies, thus turning to several other investment opportunities.

Investment Trends and Sectors

The events of the past several years have been unpredictable; however, the emergence of new trends in the Middle East investment portfolio hasn’t stopped. This is a clear sign of the development in the region as it shows the future path of the market.

Some trends involve investors turning more to sustainable investments, asset allocation, and alternative investing.

Domestic news outlets, as well as international ones, have reported that the pandemic pushed the need to place capital in new technology sectors and expand digital services. Thus, many companies from this region plan to turn their attention to this area, supporting such development by building a more FDI-friendly environment.

Experts at EY expect that the industries most likely to grow in the Middle East region are the automotive sector, manufacturing, real estate, financial services, and oil and gas.

Middle Eastern Countries For Investors to Watch Out For

Although the overall GDP of the Middle East is expected to keep a steady growing pace, the economic development of the countries will vary. The investments depend on each country’s leading ind

ustrial targets, policies, and growth plans.

Nonetheless, 81% of business executives, according to the EY CCB, presume that this region would be the preferred destination for investments in the upcoming years.

 

Saudi Arabia

Saudi Arabia is the region’s leading exporter of crude oil. In 2020, it made up 17.2% of the global crude oil exportation - 6.2% more than that of Russia. What’s more, it has the highest GDP in the Middle East - $700.12 billion in 2020, estimated to reach $880 billion by 2024.

According to the Vision 2030 framework, Saudi Arabia plans to become an eco-friendly country, move away from fossil fuels, and reach net zero by 2060.

Healthcare, finance, privatization (by allowing investments in state-owned companies), PIF strengthening, etc. are some of the other programs in this reform.

In early 2022, the country launched several tech initiatives that are worth around $1.2 billion. With this, Saudi Arabia wants to trace the path to becoming the leading tech hub in the region, which is only fortified by the promise of tech giants Apple, Google, and Microsoft to set up innovation hubs and academies.

Oman

According to the Investment Monitor, a report by the International Institute of Finance stated that Oman’s economy will grow by 3.3% in 2022. The GDP of this country for 2020 rounded at $64.

65 billion and is expected to keep a steady pace of reaching $75 billion in 2022 and 2023.

Oman plans to move forward with an annual growth rate of 3.2

% in non-oil activities. The country wants to turn its attention more to agriculture, food processing, fisheries, logistics, transporting, and storing.

The Oman Vision 2040 has set its aims at enhancing social participation and the overall development of the economy in several areas. Another plus for this Middle Eastern country is the Oman-UK agreement from earlier this year, emphasizing investments in both countries.

Israel

Israel is the key FDI location in the Middle East. In 2020, this country was the host of a significant number of startups, with around 40 unicorns - doubling the number of startups in 2019. The Israeli laws go in favor of this as they encourage R&D development and tech innovations.

This country used the Covid pandemic as a boost to increase its influence in the tech sector. Namely, considering the need for adaptation to the new changes coupled with the shortage of workers, the Israeli Innovation Authority announced a 70% funding for new innovative ideas that would train candidates for more tech-related jobs.

What’s even more, Orna Barbivai, the Minister of Economy, noted that the general export of tech services surpassed the percentage of export of goods - 51% to 49%.

Qatar

In 2019, Qatar allowed investors to fully own businesses in some sectors - contrasting the previous restrictions. This, coupled with the 10% tax rate and the fact that Qatar will host the 2022 FIFA World Cup, makes the country especially attractive to investors.

Namely, it is expected that this event will open around 1.5 million jobs in sectors such as construction and hospitality at most.

Moreover, earlier this year, Qatar and Saudi Arabia fully restored their statesmanship ties, opening the doors for more investment opportunities.

What’s Next?

Up until now, the Middle East has provided investors with many opportunities. Following the changes and the shift of the direction to more diversified economies, this is highly unlikely to change in the future.

Several countries like Bahrain and Saudi Arabia are turning more to renewable energy, pulling in more investments into this sector. As the world develops, Middle Eastern countries grow in step with their economies, opening a more FDI and investment-friendly ecosystem.