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stratEGIC Monthly September 2023 What's Happening in the Gulf: From Energy to Shopping

BY Piercamillo Falasca & Daniela Palumbo



stratEGIC Monthly September 2023

This, the 20th edition of our StratEGIC monthly, looks at some of the key issues defining the Euro-Gulf space in September 2023 and focuses on some of the main political, economic and social issues that define their trajectory and underline the possible future of the global geopolitical balance.

Energised: Qatar’s Gas Field Expansion Project

​By Daniela Palumbo

Qatar is reinforcing its position as a global leader in natural gas production with a major expansion project in the North Field—the world’s largest natural gas field. The expansion aims to increase Qatar’s annual liquid gas production capacity from 77 to 126 million tonnes, with the development of new wells, offshore facilities and advanced technologies.(1)

The project has the potential to stabilise the global energy market while supporting the transition to cleaner energy sources. Qatar’s commitment to sustainable development is evident in its environmental efforts as it support the reduction of greenhouse gas emissions by replacing carbon-intensive fuels. Moreover, the project represents a technological advancement in the natural gas industry and highlights Qatar’s focus on innovation in resource recovery. Doha’s ambitious gas field expansion project aims to meet global demand for cleaner energy, promote sustainable development and set an example in balancing energy needs with environmental concerns. This is a significant development in the global energy landscape with far-reaching implications.

Saudi Arabia’s Path to Economic Transformation

By Piercamillo Falasca

Saudi Arabia’s economy is currently in the midst of a significant transformation, characterised by a series of reforms to reduce its reliance on hydrocarbons, expanding its revenue sources, and enhancing its overall competitiveness. The latest annual review of the country’s economy by the International Monetary Fund (IMF) reveals that Saudi Arabia stood as the fastest-growing G20 economy in 2022, achieving an impressive year-over-year growth rate of 8.7%. This remarkable growth was underpinned by a 16% surge in crude oil production and a 4.8% increase in non-oil sectors, driven by a resurgence in wholesale and retail trade, restaurant services, robust ICT growth, and a flourishing construction sector. The real estate sector’s contribution was, somewhat, dampened in the latter half of the year due to higher mortgage rates. On the demand side, private consumption saw a year-over-year increase of 4.8%, but the most significant boost came from a remarkable 45% rise in non-oil private investment, spurred by the accelerated pace of various large-scale projects. Despite lower overall growth resulting from additional oil production cuts, non-oil growth is expected to remain close to 5 percent in 2023, thanks to strong domestic demand.

The diversification of the economy has been significantly driven by enhancements in the regulatory and business environment. A fresh set of laws designed to promote entrepreneurship, safeguard investors’ rights, and reduce the costs of doing business resulted in a 95% increase in new investment deals and a staggering 267% growth in licenses issued in 2022. Additionally, the Saudi Investment Fund (PIF) has been actively deploying capital to stimulate private sector investment.

​The backbone of non-oil growth has been the robust domestic demand, particularly in private non-oil investment. Saudi Arabia has seen a notable increase in the share of its citizens in high-skilled jobs, rising from 32% in 2016 to 42% in 2022. Female workforce participation has doubled over the past four years to reach 37%, already surpassing the Vision 2030 target of 30%. Non-oil exports also achieved a historic high, totalling $84.4 billion in 2022. The digital sector has played a pivotal role, with its contribution to overall growth escalating from a mere 0.2% in 2016 to an impressive 15% in 2022. This expansion has fortified the financial sector’s resilience, improved government efficiency, and enhanced financial inclusion.

Over the next three years, according to the global credit agency Moody’s, Saudi Arabia’s economy is projected to expand at an average rate of 3.2% annually. The non-hydrocarbon sector will have a substantial influence, contributing an annual average of 3.5%. According to the IMF, as well as all the major rating agencies, to sustain this remarkable performance, it is imperative to continue implementing sound macroeconomic policies and maintaining the momentum of reforms, regardless of the prevailing conditions in oil markets. Challenges ahead include ensuring that large-scale projects generate returns and boost productivity, which are essential for sustained economic growth and further diversification. Efforts to foster a more innovation-friendly environment and investments in workforce skills that align with the diversification agenda must persist. Finally, a rigorous system of monitoring and evaluation will help mitigate risks associated with targeted interventions and industrial policies, ensuring that these policies, while not a substitute for broader structural reforms, yield the intended benefits.

Welcome to the Dubai Shopping Festival 2023

By Daniela Palumbo

The Dubai Shopping Festival (DSF) is an annual event that showcases Dubai as a global shopping haven, and in 2024, it will continue its tradition of providing unforgettable experiences. The DSF has expanded and diversified over the past years and truly stands alone in the sector.

The DSF strikes a consumer nerve for several reasons: including its innovation and freshness and that it is age inclusive and features events for all people and includes children’s activities, family-friendly shows and art exhibitions. Also, the DSF is an important date on the international tourism calendar. Indeed, Dubai’s infrastructure, with its world-class malls, hotels, and transportation, renders it an attractive destination and a key venue for international conventions—especially when these include serious price drops as the DSF does on a wide range of products, including luxury fashion, electronics, jewellery and household items. The DSF also afford Dubai the opportunity to showcase the UAE’s rich culture and heritage as visitors can explore traditional souks, art exhibitions and heritage events that provide insights into the UAE’s and the Gulf’s (more generally) history. Thus, this cultural immersion adds depth to the shopping festival, making it also an educational experience.