DUBAI: Potential energy price shocks are the biggest worry facing business leaders in the Middle East and North Africa, according to a report on global risk by the World Economic Forum (WEF).
The prospect of sharp volatility in energy prices — the main government revenue stream in most of the countries of the Arabian Gulf — is a bigger concern than unemployment or terrorist attacks in the region, the WEF survey found.
The only other part of the world were the energy price was the main concern was in Eurasia, which includes resource-rich Russia, and parts of central Asia.
In the three biggest regions as defined by WEF — North America, Europe and East Asia/Pacific — the fear of cyberattack has grown steadily over the past three years and is now the main concern.
Worries about failures of national and regional government was also a significant risk factor in many parts of the world, especially in emerging markets.
The findings — based on responses from 12,500 executives in 140 economies — were presented at a media briefing at the WEF’s Global Future Councils meeting in Dubai.
Hussain Sajwani, the Emirati businessman who founded the Damac Properties real estate group, said that the region faced two distinct types of challenge: Global ones, like financial, terror or cyber related threats; and risk specific to the Middle East, like oil price volatility and political challenges.
Sajwani, who is a business partner of President Donald Trump, said another issue for the region was the continuing commitment of the US.
We've got the power - and @EnassAbu wants to help us store it.#energy #gfc18
Read more here: https://t.co/jy6nGtnjxX @h2gopower pic.twitter.com/nUzq9o7CRg
— World Economic Forum (@wef) November 11, 2018
“The one major thing that concerns me is American foreign policy in the region, and how far it is going to be involved going forward, and take a leadership role like they have done in the past. Their role is very crucial to create a balance of power, and that concerns me,” he said.
Sajwani warned it was not accurate to view MENA as one uniform region.
“There are great differences between a rich country like the UAE, and a poor one like Yemen,” he said, pointing also to different levels of political stability in different countries.
Borge Brende, president of WEF, said that the current oil price gave Saudi Arabia “a unique position to go on with its reforms and to diversify its economy.”
He added: “This is something that Saudi Arabia has committed to and it is an important path toward securing investment that will create jobs. It has a young population and more young people are joining the workforce in coming years.
“The reason Saudi Arabia is in a fortunate position is the revenue from oil earnings but we have seen other nations like the UAE that have been diversifying and also building strong sovereign wealth funds that you can direct toward research and development.”
Mirek Dusek, the executive in charge of WEF’s Middle East and North Africa unit, said: “Given the current geopolitical uncertainty globally, cooperation within and among regions is of critical importance. Understanding the evolving risks in different regions is therefore top of mind for business leaders.”
