Emerging trends in MENA and around the globe
Castlereagh’s Market Monitor collection offers top-tier news and analysis of future trends and buried topics in business, geopolitics, energy, finance and more. Utilising on-the-ground sources and including commentary from some of the region’s top analysts and policy experts, gain a fresh perspective on developments in the Gulf, Middle East, North Africa and further afield.
Electricity reforms are a priority for Lebanon, a country in the midst of an economic crisis, at high risk of default with a debt to GDP ratio surpassing 150%, and a negative outlook credit rating. The power sector is accountable for $36bn – 40% – of Lebanon’s public debt. The country is seeking a fast-track solution with ambitious targets, but these are unlikely to be met and may compromise the sector’s sustainability and effectiveness.
Croatia and Montenegro have large and growing tourism industries. While Montenegro has seen a range of major resort investments from foreign companies, developments backed by foreign direct investment in Croatia have been held up by bureaucracy and poorly conceived projects. Nonetheless, opportunities in Croatia and downside risks in Montenegro should not be discounted.
On a roller coaster ride for the past thirty years, Iran’s economy is once again in crisis mode. After a modest recovery following the signing of the Joint Comprehensive Plan of Action (JCPOA) and lifting of the UN oil embargo of 2012–16, the economic downturn which began in 2018 after the US implemented economic sanctions is set to worsen significantly this year and into next. Despite the adverse impact this will have on the Iranian people, the end goal of US sanctions – to topple Tehran’s government or force it into a new President-Trump-approved nuclear deal – will not work, in part because Iran has built a substantial balance of payment buffers and diversified key parts of its economy.
Renewable energy projects, particularly utility-scale grid connected developments, are emerging as an investment bright spot and capacity growth out-performer in sub-Saharan Africa’s wider power market. This will continue over the coming years, underpinned by strong underlying demand for electricity, the lower-risk profile of renewable energy assets compared with conventional power infrastructure, and the continued implementation of government support mechanisms, namely procurement auctions.
In the midst of renewed tensions with Washington over Ankara’s military incursion in Syria, there are fresh concerns that Turkey’s economy could soon face another confidence shock. The economy has proved relatively resilient to headwinds in the recent past, and the country has maintained a good outlook for foreign investors. The main drawback has been feeble domestic confidence, notably from consumers.
The surprise attack on the Saudi Abqaiq and Khurais oil facilities in September has drawn attention to the increasing role of Unmanned Aerial Vehicles (UAVs), commonly known as drones, in conflict. Innovations in military technologies require a new strategic discourse, but in the realm of unmanned warfare there remains a number of crucial unanswered questions, both about the impact of UAVs on political and military decision making, and the ethical and legal implications of their usage.
Strong economic growth in Vietnam will help open up opportunities in a variety of sectors outside of manufacturing over the coming years, although the business environment remains challenging. Structural factors, including rapidly rising incomes, major urbanisation and an ageing population, will underpin expansion in three sectors in particular – construction, electricity transmission and distribution, and health care.
Djibouti’s logistics sector will grow rapidly in the coming years, establishing the country as a major conduit for East Africa trade. Chinese firms will be instrumental in providing the necessary capital and expertise. Realising the wider economic aims of the 2035...
Jordan has been at the forefront of renewable energy deployment in the Middle East, with the sector accounting for 7.9% of the country’s total electricity generation in 2018 compared to 2% in 2013. Yet, challenges hindering the upscaling of renewables are multiplying as the sector gains momentum. Being an early adopter of renewables, Jordan’s experiences should serve as lessons both for economies in the region and developing countries around the world.
The key uncertainty following the recent strike against the Khurais and Abqaiq facilities – the heart of Saudi Arabia’s oil industry and a vital spoke in the world’s energy infrastructure – is how the US and its regional partners will respond. Among the mainstream foreign policy thinkers, a consensus appears to be emerging that in order to save US leadership in the global economic and geostrategic arena something must be done to rebuild its credibility and bargaining power, but in novel ways.
From a situation of no diplomatic connections and almost non-existent economic relations only a quarter of a century ago, Chinese–Israeli trade, investment and political ties are on an upward spiral. Although global tensions, most notably the US’s objection to the supply of certain technologies to China and, more recently, the trade war between those two countries are slowing the expansion of relations, there are sound foundations for growing geoeconomic and geopolitical cooperation, based on correlating interests that serve both countries.
Vietnam will continue to emerge as a global manufacturing hub in the coming years, particularly in the electronics sector. Despite rising trade tensions with the US, structural factors including low wage costs, a large infrastructure pipeline and recently signed free-trade agreements should sustain investment in the manufacturing sector. Long-term challenges include managing growing demands for political representation and rising concerns over the environmental sustainability of the country’s growth model.