LOGIC Consulting

November 27, 2023


Economic Outlook of MENA Region

The macroeconomic backdrop will be supportive of FDI inflows for most major economies in the MENA region.

According to the Economist Intelligence Unit, more than half of the countries in the region are expected to achieve average economic growth rates of above 3% for 2023 and 2024, including Turkey, Egypt, Morocco, Qatar and the UAE; Saudi Arabia will to achieve more modest growth (2.4%), but this follows a world-leading growth performance in 2022 of 8.7%. In addition, most countries in the MENA region will continue to have relatively low rates of inflation and stable exchange rates—most notably the GCC states—which are conducive to a welcoming investment environment.

MENA Region Economic Growth

(Annual average real GDP growth; %; 2023-24)

UK & MENA Region

The UK and MENA Region are keen to strengthen their economic partnership in the wake of Brexit and the pandemic, where both are working to facilitate trade and investor ties. Countries in the MENA region continue to adopt a ‘post-oil’ mindset, creating opportunities for major global market players to expand their operations.

On the other hand, the UK has been prioritizing sectors such as technology, financial services, creative industries, and green technologies as part of its strategy to remain competitive and adapt to evolving global dynamics.

In 2019, the UK and the combined economies of the GCC ranked among the world’s largest economies, standing at the 5th and 13th positions, respectively. Collectively, they contributed 5.2% to the global GDP.

UK-GCC TRADE £44.6BN IN 2019

  • In 2019, GCC-owned businesses employed over 25,000 workers in the UK
  • Exports to Saudi Arabia alone were estimated to support directly and indirectly around 120,500 UK jobs in 2018
  • Supply chain links: 52.1% of the UK’s GCC goods imports, and 73.5% of the UK’s goods exports to the GCC were intermediate products
  • In 2019, the GCC was equivalent to the UK’s 3rd single largest export destination and 4th largest import supplier outside of the EU
  • The combined economies of the GCC are projected to become the 14th largest economy by 2030, excluding other trading blocs
  • The GCC’s overall demand is projected to reach around £0.77 trillion by 2035

Saudi Arabia’s Investment Momentum

  1. Foreign investments in Saudi Arabia maintained a steady growth across the years, based on the latest official data issued by the Saudi Central Bank (SAMA), which strongly indicates the growing investor appetite in the Kingdom.
  2. In spite of the pandemic-fuelled economic disruption of 2020 and 2021, KSA maintained an upward momentum in FDI inflows.
  3. Given the importance of attracting investments to achieve Vision 2030 goals, the National Investment Strategy was unveiled to empower investors, define attractive investment opportunities, and open doors for the private sector to thrive. The National Investment Strategy aims to triple investment volume, as measured by GFCF, to SAR 2 trillion by 2030 (equivalent to 30% of GDP), and position the country among the top ten economies in the Global Competitiveness Index by 2030.
  4. In April 2023, Saudi Arabia secured the 3rd position in the Middle East and 6th globally in the Emerging Markets ranking of the 2023 Foreign Direct Investment Confidence Index released by Kearney, affirming the high investor confidence in the Kingdom.
  5. Saudi Arabia continues to improve on the OECD FDI Restrictiveness Index improving 35% overall between 2015 and the most recent, available, measurement in 2020. While the FDI Index is not a full measure of a country’s investment climate, it is a critical determinant of a country’s attractiveness to foreign investors.
  6. According to the OECD report, Saudi Arabia has shown improvements in reducing FDI restrictions across sectors between 2015 and 2020 at a time when many countries are constraining the flow of FDI to protect local sectors.
  7. Foreign Investments Breakdown in Saudi Arabia.
  8. FDI Projects in KSA Saudi Arabia has announced several innovative greenfield projects that offer international financing opportunities for investor participation in nation-building while realizing attractive returns. In 2021, 147 greenfield projects were announced, growing 67% from the previous year, attesting to the strength of a strong pipeline of opportunities. In addition, the number of M&A deals in Saudi Arabia increased by 33% in 2021, recording a total value of $24 Bn in net M&A, attesting to global investor interest in the country.
  9. Investment Licenses The number of investment licenses issued by MISA recorded an increase of 673.4% compared to the same period last year, a total of 4,455 issued licenses in Q2 2022, compared to 576 licenses in the same quarter last year, due to the efforts to promote FDI and enhance investment environment in Saudi Arabia, in addition to correcting the status of violators of the anti-concealment law, a program launched by Ministry of Commerce as part of the National Transformation Program, to combat commercial concealment and commercial fraud in cooperation with 10 government entities including MISA.

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