Economic And Market Update

The GCC and global economic outlook for 2022 and beyond were majorly impacted by Russia - Ukraine Crisis, with wider economic ramifications, sharp increase in fuel prices, continuing supply chain disruptions from China and European Energy Crisis. This has widely impacted all economies and Capital Markets around the world. This has resulted in extended period of - funding winter, large scale layoffs by big technology companies.

Central Banks have carried out various interest rate hikes frequently during the year to cool down inflationary pressures and investors are being risk averse. This has resulted in sharp tightening of global monetary conditions with higher borrowing costs by as much as 4% till date.

The prospects for a long recession in major global economies (stagnation and high inflation) such as U.S, Europe and including China. Economic uncertainty has risen sharply, and expectations for a near-term recovery are increasingly becoming unclear.

Major GCC countries like UAE and KSA have performed much better
(GDP growth FY 2022 – 7.40%) compared to developed world, however, are also facing these headwinds. GCC future outlook remains stable but with lower growth rates expected around 3.5% as compared to higher rates during 2022 as a result of higher oil prices and past surpluses. UAE and other GCC countries have been able to bounce back after a significant drop in growth during the pandemic, however, look stable and optimistic for 2023.

The GCC region’s major economies have focused on reforms, expanding public financial markets/IPO’s and diversifying their income streams with monetary and fiscal changes. They have been able to effectively manage inflation and have continued to invest heavily in building future economic infrastructure and technological advancements.

Major events were held such as the FIFA World Cup and Expo 2020 which had a huge positive economic impact including marked recovery in tourism, hospitality, airlines recovered, and the high-end real estate projects. This has boosted the overall investment environment in the region despite global challenges.

Read More