Bahrain, Iran, Iraq, Israel, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, Syria, the United Arab Emirates (UAE), and Yemen had different rates of economic growth. Development is impacted by various growth strategies, policies, and targets across nations.

With this new sectors have emerged after the COVID pandemic which is still in its infancy, and not as developed as others, allowing one to look for an option for attracting investments. Below are some details about the sectors that are today one of the most successful, developing, and attractive for investments.

Infrastructure
One of the main forces behind the Middle East economy is its infrastructure. The Middle East countries are placing a lot of emphasis on this sector’s development and, as a result, are spending a lot of money on renewable energy, urban transportation, and road maintenance. Particularly the steel sector has swiftly developed into a reliable choice for investors looking for sector fund prospects.

If you have knowledge about infrastructure and want to do an investment then UAE is the best place to look, as UAE offers numerous opportunities for expansion and establishment.

As of early 2017, Dubai had over 3,200 ongoing projects worth USD 245 billion. When the Expo 2022 arrived, the construction projects contributed to USD 42.5 billion.

Real Estate
According to a Deloitte report, the Middle East real estate market would expand by up to 111% during the following five years. Additionally, there are more opportunities in this industry due to the rising interest in foreign investment and tourism.

The report stated that the average property price in Dubai and Abu Dhabi increased by 11.3% and 1.5% respectively this year. In the first quarter of 2022, Dubai saw an average rental gain of 10.5% in the retail sector, whereas Abu Dhabi saw a gain of 7.8%.

Fintech
The majority of financial services are now provided by fintech, which has in some cases taken the place of traditional banks. As a result, this industry attracted the most acquisitions and investments.

The volume of digital services worldwide surpassed USD 8 trillion in 2021, and the Arab Monetary Fund’s chairman of the board of directors estimates the figure will surpass USD 10 trillion by 2027. Additionally, a record USD 3.45 billion is predicted for the regional industry in 2026. In April 2022, startups in the area working in this industry were successful in obtaining USD 9.8 million in funding.

E-commerce
COVID has boosted people’s reliance on e-commerce websites, particularly in the Middle East and Africa, which has speed up the growth of these sites and the expansion of the services they provide.

On Forbes’ list of “The 50 Most Funded Startups in the Middle East and North Africa for 2021”, the e-commerce industry came in second place with 11 companies.

Startups in this industry provided 85% of the total fundraising value in April 2022. Therefore, choosing to start a business is a wise choice because it will undoubtedly continue to develop.

Artificial Intelligence
When we suggest that artificial intelligence is running every aspect of our lives, we might not be exaggerating. For instance, by 2031, the UAE wants to rely entirely on artificial intelligence for services and data processing. By 2031, the state is anticipated to generate roughly 300 billion dirhams in revenue or 13.6% of the GDP.

According to Gartner, Global AI software sales are anticipated to reach USD 62.5 billion in 2023, up 21.3% from 2022. These figures indicate a bright future for the industry, therefore it makes sense to focus on it because of the market’s high development prospects, especially given how heavily most developed countries rely on this technology.

Cyber Security
There is no doubt that the concern over cyber security has spread to all businesses and even nations due to the possibility of their critical data being compromised.

According to IBM, over the previous year, the average cost of a data breach climbed from USD 3.86 million to USD 4.24 million. Additionally, complex cybersecurity and data protection toolkits are being sought after to be replaced by a single unified interface by 71% of Saudi and 70% of Emirati businesses, respectively. Consequently, starting a business in this industry has never been more profitable or in demand than it is now.

Healthcare
Since the COVID-19 pandemic, the significance of the healthcare and hospitality industries has received more emphasis.

The Middle East offers a variety of chances in this industry, and its infrastructure has been established to make it easier for anyone who wants to start a business in this industry. The important thing is to get licenses and approval to start a business in Middle East countries.

Metaverse
We have reached the most crucial point now that the metaverse has permeated the real world and has established a significant presence in the commercial markets.

As a result, most multinational corporations have entered this market, particularly those in the Gulf. Big IT firms believe that the “Metaverse” is the Internet’s unavoidable future and that it will be worth USD 800 billion by 2024. Thus, getting started in this industry early may prove to be a virtual guarantee of success.

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In fact, a Bloomberg analysis found that Sukuk is seeing a warm reception from investors and had the best start of the year since 1999. This after in 2021, the Islamic bond market recorded a growth of 39% from the previous fiscal on the back of a post-pandemic recovery across the globe to reach the $250 billion mark.

Sukuk are the equivalent of ownership bonds that complies with Islamic laws of Sharia.

A report published by the news agency cited HSBC and Deutsche Bank officials saying that the high oil prices, which is a fallout of this war, is a result of the interest from the buyers.

Saudi Arabia and Turkey are the biggest markets for this investment product. In the calendar year 2021, Saudi Arabia issued $32 billion worth of Sukuk beating Malaysia, the second-highest by a margin of $6 billion.

According to the Bloomberg data, the Islamic Sukuk market suffered a 4% drop in investment-grade ratings while western bonds were downgraded by 7% in 2022. A Fitch Rating study too found that US dollar-denominated Sukuk issued in emerging markets were less exposed to risks than that bonds. A Fitch index of Sukuk in these markets also outperformed the bonds index for the first quarter of 2022.

Incidentally, in these uncertain times, some countries like Egypt are issuing their own sovereign Sukuk. According to a Reuters report, Egypt will issue its first such sovereign guaranteed Sukuk before the end of June 2022, when the country’s financial year ends.

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The super-rich, who enjoy the patronage of the Russian president Vladimir Putin, has landed in Dubai in their private jets. This has been possible as unlike the West which has been united in its sanctions against the Russian regime and its enablers, the UAE has been agnostic about the war in Ukraine.

The UAE, which like the rest of the world, was suffering due to the pandemic is seeing a buzz in the high luxury market. Not only high-end properties but bankers, luxury car dealerships, and marinas are witnessing a stream of incoming customers secretly. And a significant number of these transactions are happening in cryptocurrencies, while some have been through established norms of currency transfers via intermediaries to ensure discretion.

Among the high-flying Russians that have reportedly set their sights on the Emirates is Roman Abramovich, who has been recently forced to sell English Premier League giants Chelsea.

Reports say that while there is a flurry of super-rich making their way into the UAE, the regular traffic of business flights between Russia and the oil-rich nation has continued to be normal signaling business as usual.

This is at a time when Moscow remains isolated from the world with most of the country disconnected from mainland Europe.

The interest among the well-off Russians in UAE has been so huge that a question asking if Russians can get UAE citizenship on a Russian-language magazine—the Russian Emirate — published in the UAE has got 83,000 views.

The website of the magazine has also seen its weekly readership double since the first batch of sanctions were imposed by the West, reported DW.

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Julia Simpson, WTTC President & CEO, said: “The COVID-19 pandemic caused significant losses to the Middle East’s Travel & Tourism sector, but we now have a reason for real optimism. Since the start of the pandemic, governments across the Middle East have shown a real commitment to travel and tourism. Saudi Arabia, in particular, has shown strong leadership throughout the crisis and is making a major investment in Travel & Tourism.”

“2022 is poised for a strong recovery if governments across the region continue to open up their borders and remove restrictions to travel which will have a massive positive effect on both the economy, the society, and jobs,” she added.

The WTTC noted that before the pandemic, the sector was generating US$270 billion in revenues to the region’s economy. And the degeneration of the market was 50% due to the COVID-19 in 2020 with the revenues falling to the tune of $140 billion.

According to businesses operating in the region, Dubai Expo 2020, which started in the previous week, has significantly contributed to the uptick.

According to Hotelier, the incoming tourist arrivals in Dubai recorded a 100% year-on-year rise in 2022 in January with 979,700 tourists landing in the global destination.

However, the Russia-Ukraine war and its direct and passive fallouts are likely to put the growth trajectory at a steeper decline.

Incidentally, Russia itself is one of the top three source markets for the entire Middle East region, according to industry players. While the ongoing conflict has immediate ramifications like that of closing of airspace and shuttering of Russian airlines, the dwindling value of the rouble will also have mid to long-term impacts.

Otherwise, an increase in aviation fuel price, food inflation, and overall higher living costs across the world may also harm the growth prospects of the industry this year.

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The strong recovery will also trickle down to next year primarily because OPEC+ mandated oil production and higher oil prices improve business sentiment and attract additional investment. These favourable market conditions have successfully managed to decrease fiscal and external imbalances and have also helped export earnings to recover. However, World Bank has also mentioned that when it comes to the outlook in the medium term, some of the risks like slower global recovery, renewed Covid-19 outbreak and oil sector volatility still remains.

Issam Abousleiman, World Bank Regional Director for the GCC, told the media, “With high population growth and limited options in the private sector, the wage bill has become unsustainable in some GCC countries, as it is a large part of government spending and of the economy overall. Given their improved fiscal situation, this is an opportune time for GCC governments to accelerate their reforms agenda and reach the goals they set for themselves.”

The average GCC wage bill has managed to surpass the Organization for Economic Co-operation and Development’s (OCED) average in the last twenty years, except in Qatar and the UAE, the report mentioned. The civil service allowances in Saudi Arabia rose to SR148 billion in 2019 from SR44 billion in 2016, thereby forming more than a third of the Kingdom’s total wage bill.

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This was announced during the launch of its annual Middle East and Central Asia Regional Economic Outlook report that outlines the region’s post-pandemic progress and the policies that can help secure a better recovery.

The panel was moderated by Jihad Azour, Director of the Middle East and Central Asia Department at the IMF, Badr Jafar, CEO of Crescent Enterprises, Sherif Kamel, Dean of the American University in Cairo School of Business, and Monica Malek, Chief Economist of Abu Dhabi Commercial Bank.

Azour, during the meeting, said, “Since the beginning of this year, the MENA region has made good progress and the recovery is ongoing despite the new outbreaks. Yet, the recovery is uneven and incomplete, with new challenges emerging, such as rising inflation and inequities. Countries with higher vaccination rates, less dependence on tourism, and more policy space will recover more quickly and experience less scarring in the longer term. Oil exporters will benefit from higher oil prices.”

Even though a large number of challenges are creeping up from the region, Jafr noted that there are some positive trends happening in the private sector. Apart from a rise in venture capital investments, and a conscious shift towards embracing Environmental Social Governance (ESG) principles in business, the private sector is becoming more and more essential to reach the nation’s goals.

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The UAE is popularly known as the Middle East’s commercial capital for more than a decade now and has also recently made headlines for giving tough competition to Saudi Arabia. The country will focus on comprehensive economic agreements with other nations that show high potential for growth. Additionally, the UAE will also ease visa restrictions, in hopes to attract more tourism.

The UAE will primarily focus on South Korea, Indonesia, Kenya, Ethiopia and Turkey and recently, Turkey president Recep Tayyip Erdogan has warmed dramatically after eased tensions over regional politics.

The UAE will also expand its ties with Britain, India and Israel and the UAE’s foreign policy will serve the country’s economic interests going forward.

Thani Al Zeyoudi, UAE minister of state for foreign trade, told the media, “We’re going to open up the markets more aggressively with many countries. Let the Saudis increase the competition. It means the pie is going to be bigger and having a bigger pie means that the UAE share out of this pie is going to be bigger.” He also mentioned that these agreements will include strategic investments, government procurement, trade of services and goods, and research and development.

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The report also mentioned that the primary reason behind the growth despite the crippling economic conditions was primarily due to sovereign wealth funds and retail investors.

Titled ‘Global Asset Management 2021: The $100 Trillion Machine’, the report mentioned that many sovereign wealth funds had high equity exposure in developing and emerging markets, which performed well as the financial sector started getting back on its feet. Additionally, retail mutual funds in the region grew by 12 percent in 2020 aided by the strong global market performance bringing this outcome.

Harold Haddad, Managing Director and Partner, BCG told the media, “Much like every sector, the resilience of the asset management industry was tested in 2020, with initial outbreak disruption and subsequent economic tailwinds presenting a period of sizeable uncertainty for the industry and its incumbents. However, the Middle East has prevailed in the face of adversity, and it is now apparent that the region has entered 2021 in a position of strength following healthy returns.”

The report also mentioned that globally, the net flow of asset management has reached $2.8 trillion in 2020 or by 3.1 percent, compared to the average 1-2 percent in the last decade.

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