COVID-19 has shined the light on disruption, transformation and opportunities for growth in new industries and sectors. Priyanthini McNair, Regional Head of Client Coverage, HSBC MENAT discusses.
A new economic game plan is in play across the Middle East and North Africa (MENA), with consumer industries front and centre. But of course, the schedule of progress needs rethinking amid the sudden disruption triggered by the Covid-19 pandemic and the subsequent economic strain.
Consider that these two major hurdles come atop an already challenging outlook, with consumer industries needing to adapt to the energy transition towards a lower carbon future, growing populations. When you combine all these pressure points, it’s not surprising that three words stand out as priorities for the year ahead: resilience, agility and collaboration.
Looking further afield, beyond today’s upheaval, investing in consumer industries is one of the golden tickets on this multifaceted economic train that is accelerating the region’s journey on the global stage. They offer great potential, great appetite and healthy risk reward outlooks.
We find that emerging countries will account for roughly 50% of global GDP by 2030 – a seismic shift from half of that in 2000. China will continue to be the single biggest contributor to global growth, but another five Asian economies will be among the world’s six fastest-growing economies – Bangladesh, India, Philippines, Pakistan and Vietnam. And by 2030, Africa will have more working-age people than China. Its working-age population is set to grow by more than 2.5% a year for the next decade.1
That tells us two things. One is that MENA, positioned at the heart of the Old and New Silk Road from Asia to western Africa, can leverage prosperous neighbouring regions to quickly bolster market share in consumer industries. And secondly, the bullish era of emerging economies is a golden window for MENA to accelerate progress through partnerships and joint ventures that are focused on innovative and scalable projects and policies.
It also makes sense to make it easy for residents in the UAE to invest in a region that is home to some of the world’s highest levels of Gross Domestic Product (GDP) per capita with large disposable incomes. For one, the emergence of the UAE’s “golden residency visa” for talented and affluent residents speaks volumes, as does Saudi Arabia’s plans to open its doors to international tourists.
The eager response from aspirational national populations and the large number of ambitious expatriate workers was certainly revving the speedometer of progress. And while this has undeniably been hugely disrupted by the impact of the pandemic, we do expect this positive sentiment to return. The global economy could stabilize in the next twelve months, with the International Monetary Fund (IMF) saying 5.8% growth is possible in 2021.2
Today’s challenging situation does not void all the opportunities that existed before the global pandemic. It simply postpones many and tweaks a few. Huge potential awaits. In the meantime, be patient and stay safe.
Yes, times are tough for many amid the global pandemic. But every downside has an upside; every storm must pass. Even amid today’s slowdown, there’s preparatory work to do. When the global economy inevitably picks up, consumer industries must be ready to pounce upon opportunities.