Middle East: The decade ahead

21 October 2010

Take part in MEED’s future trends survey that aims to identify the issues that will define the Middle East economy in 2020. Vote for the issues you think will have the greatest impact on shaping the region in the coming decade

Over the past 10 years, the region has been transformed by a wave of investment fuelled by high oil prices, increased hydrocarbons production and a credit boom.

The next decade is sure to deliver equally significant change. But what will that involve? Will Middle East growth still depend on oil? Will the re-emergence of Iraq reshape the region’s power base? And will a lack of political reform lead to more extremism?

MEED is surveying its subscribers to identify the trends they think will shape the region over the next ten years. The results will form a valuable tool for anyone seeking to position themselves for the challenges and opportunities ahead.

Below are 30 issues that MEED believes will define the Middle East in 2020. Vote for the 10 that you think will have the greatest impact.

1. Tackling the demographic timebomb
A government-led drive to create jobs for the region’s rapidly growing young population will drive economic and social policy

2. The re-emergence of Iraq
Resource-rich and strategically important, Iraq will overcome political instability to re-emerge as a regional economic powerhouse

3. A declining expat workforce
An increased drive for nationalisation of the workforce will encourage more locals into the private sector leading to a significant decline in the number of expatriate workers in the region

4. The recovery of Dubai’s real-estate sector
Following a post-credit crunch dip, confidence will return to Dubai’s real-estate sector leading to a new wave of ambitious developments

5. Depression in the credit markets
The damage done by the global financial crisis to the banking sector will restrict lending in the region for the next 10 years

6. Company consolidation
There will be significant consolidation in the region in sectors that expanded rapidly during the boom years, with many companies launched during 2000s either going out of business or seeking mergers to survive

7. Downstream hydrocarbons development
Supported by low-cost and abundant feedstock, the region’s oil producers will seek to earn more from their natural resources by moving along the hydrocarbons value chain and investing heavily in downstream oil and gas products

8. A nuclear decade
The region will invest heavily in the development of nuclear power programmes to meet the rising demand for electricity and to free up hydrocarbons for export

9. The challenge of meeting electricity and water demand
Huge investment in power and water infrastructure to meet rising consumption will drive the region’s major projects markets

10. A drive to develop social infrastructure
With regional population growth of around 2 per cent a year, a drive by governments to provide modern social infrastructure, including schools, hospitals and housing, will underpin a construction boom

11. An exploration drive to find new sources of oil and gas
With its oil fields ageing, the region will accelerate its drive to tap more challenging reserves and develop technology, skills and equipment for enhanced recovery

12. Financial market reform
The region’s nascent financial markets will drive better corporate governance and transparency over the decade, making the sector more attractive to potential investors

13. The rise and rise  of Islamic banking
The fledgling Islamic banking sector will emerge from the downturn with less exposure to bad debt than the conventional banking sector and become a primary source of finance for the region

14. Building transport links
The drive to improve local, regional and international accessibility links will spur heavy investment in rail, air and shipping progress that will reshape the regional economy

15. Isolated Iran
Despite having 10 per cent of the world’s oil, the second-largest gas reserves on earth, more than 70 million people and a diversified economy, economic sanctions will keep Iran isolated, leading to greater regional insecurity that will put a brake on the wider economy

16. The shift from West to East
The rising influence of China and other east Asian markets will loosen the region’s close ties to the West’s energy-consuming markets to be replaced with growing ties to the Far East

17. The drive for political reform
The region will seek to attract greater international investment and integration with the global economy by pushing ahead with decisive political and institutional reform

18. The re-emergence of Libya
With Africa’s highest per capita gross domestic product and biggest oil reserves, as well as a declared intention to open up economically, Libya will emerge as the continent’s new boom economy

19. Oil prices
The health and wealth of the Middle East will continue to be defined by oil prices throughout the next decade

20. A real-estate recovery
The return of confidence in the regional real-estate sector – and in bank lending – will lead to a strong recovery in the real-estate sector as governments encourage private investment programmes to develop housing and associated facilities

21. Regional integration
The desire to create a stronger economic, political and security bloc will encourage the region’s governments to overcome international differences and accelerate the drive for integration 

22. The return of inflation
Global food and commodity price rises, low interest rates and the return of quantitative easing  (governments increasing liquidity by printing money and buying back debt) will lead to an asset price bubble and the return of inflation

23. The rise of renewables
The region will become a centre for solar energy over the next 10 years, as states invest in the technology, along with wind farms to meet rising domestic power demand

24. The rise of PPP and the declining role of state financing
Governments cannot sustain the cost of providing public services and will increasingly will seek to pass the financial burden to the private sector through public-private partnership (PPP) procurement and privatisations

25. Saudi Arabia
The region’s biggest and most-powerful economy will become even more central to the regional economy as Riyadh introduces reforms aimed at attracting foreign investment and creating jobs

26. Regional security
With growing antagonism between Iran and the West, no progress in the Palestinian-Israeli conflict, as well as ongoing fighting in Iraq, security fears will continue to hold back the region’s economic development

27. Gas shortages delaying industrial development
The lack of gas availability will be an even bigger concern than today, leading to a slowdown in investment in new industrial projects

28. The succession of new regional leaders
With several ageing rulers in the region, the succession to new leadership will be a significant factor in defining the Middle East economy in 2020

29. Improved technology
A change in the speed and availability of broadband communications technology will transform data communication and business over the next decade

30. Food security
The region’s lack of water resources makes it difficult to grow food domestically. The next decade will see spending on food imports reach $49bn and lead to growing ties between the region and sub-Saharan Africa as GCC countries buy up agricultural land to strengthen food security

Have your say

To take part in the MEED Vision 2020 Survey, vote for the 10 trends you think will most significantly shape the Middle East economy over the next decade

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