The economic risks of an energy price shock and unemployment levels are the two top concerns for the Middle East and North Africa region’s business leaders, according to the 2018 World Economic Forum Regional Risks for Doing Business report.
In Saudi Arabia in particular, vulnerability to changes to oil prices was pronounced as the key risk in the latest report, which was published in conjunction with insurance broker Marsh. Saudi government spending for 2019 is projected to reach a record high of 1.1 trillion Saudi riyals ($293.3 billion) in a budget based on an $80 oil price per barrel. In total, leaders from five countries cited an energy price shock as the top risk. The other four were Bahrain, Oman, Qatar and Kuwait. (Read more here).
The United Arab Emirates was somehow an outlier in the survey, since technology-related risks were considered the most prominent. Cyber-attacks was highlighted as the top risk for the UAE, similar to Europe and North America, which a press release accompanying the report which was distributed on Monday said was a consequence of the higher sophistication in UAE’s economy, with its greater focus on innovation and advanced technological systems. (Read more here).
Other technology-related risks that were prominent in the UAE were “misuse of technology”, which was highlighted as the third-biggest risk and “data fraud”, which was fourth-biggest.
While unemployment was the second-biggest risk for the region as a whole, this threat was considered among the top three risks in Bahrain, Egypt, Morocco, Oman and Tunisia, with unemployment among Oman’s young population, for instance, reaching as high as 50 percent, according to the report. (Read more here).
In Lebanon, geopolitical risks were the biggest concerns for business leaders, as the highly-indebted country remains without a government for over six months, largely as a result of the complex regional rivalries that have dominated its political space. The most cited risk to doing business in Lebanon was ‘state collapse or crisis’, followed by “terrorist attacks” and then “failure of national governance”. (Read more here).
In Egypt and Iran, water crises were cited as the top risk for doing business, highlighting the need for addressing this growing environmental issue. Egypt had entered into a major dispute with Ethiopia in 2017 over a dam-building project by Addis Ababa on the Nile River, which Cairo viewed as a threat to it water security. (Read more here).
And in Iran, drought spurred several protests in 2018 as discontent grew over water mismanagement. (Read more here).
Globally, unemployment or underemployment was the top risk, followed by failure of national governance, while energy price shock was in the third spot. In Europe, cyber-attacks was the top risk seen as the biggest threat for doing business, largely as a result of its more advanced economies. Europe was hit by a major ransomware attack, ‘WannaCry’, that disrupted health and transport systems in 2017, and the region witnessed a rise in cyberattacks in first quarter of 2018. (Read more here).
(Writing by Nada Al Rifai; Editing by Michael Fahy)
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© ZAWYA 2019