By Reem Abdellatif
CAIRO: Trade in the Middle East and North Africa (MENA) region is expected to expand 131 percent by the year 2026, with metal products being a “driving force” for the region, according to HSBC’s latest Trade Connections report.
Areas of interest in the sector are expected to be non-crude oil and bitumen products, diamond, gold as well as crude oil.
With these rising trends, the region’s governments are looking to expand trade and eyeing sources other than fossil fuels, the report stated.
Egypt, the region’s largest economy, is anticipated to be the fastest growing exporter and importer, expanding trade by 167.40 percent, if the country does not witness further political turmoil.
“Egypt has all the fundamentals for the vibrant economy despite the challenges that it has recently faced, Egypt is part of a region that is increasingly on the radar of international investors, and has a strategic location that connects the East and the West,” Halla Sakr, deputy chief executive officer of HSBC Egypt, said in the bank’s statement.
The country’s flat rolled iron and steel, for example, will be the largest and fastest growing export product with a growth of 21.70 percent over the coming five years, the report stated.
Sakr said the data underlines belief in Egypt’s long-term potential as one of the strategic markets in the region as well as a “priority” country for HSBC group.
While the region’s trade will grow faster than global trade over the same period, the study predicts that the current largest MENA trading partners will continue to be the US, China and India, focusing on the dominance of oil, hydrocarbons and gas.
However, while most of the world’s crude oil resources are fixated in MENA, bank officials underlined the importance of other opportunities.
“While two-thirds of the world’s discovered crude oil reserves are in the MENA region, we shouldn’t just see the region as a pure hydrocarbon story when we look at long-term trade,” Tim Reid, regional head of commercial banking at HSBC Middle East, said in the report.
The pace of industrial growth in MENA overall will continue to grow as the region witnesses an increase in the importance of steel and iron.
Saudi Arabia, as a major player in the region’s economy, is expected to grow by 107.12 percent by 2026 with export trade increasing 5.52 percent in the next five years and imports rising 6.99 percent.
Despite the region’s political upheaval, the global economic downturn, as well as the Eurozone debt crisis, Saudi Arabia fared reasonably well in the past year, according to the report.
The United Arab Emirates is also predicted to see a huge trade boost with a 5.52 percent increase annually over the next 15 years. Overall trade is expected to grow 124.03 percent by 2026.
In the UAE, however, progress will be fuelled by the “emergence” of trade in electrical apparatus, aircraft, jewelry and oil derived products.
Qatar, which has also fared relatively well despite the global economic downturn and the region’s political turmoil, is predicted to see trade grow 150.74 percent by 2026 and substantially faster than the world over the next 15 years.
“This is due to a strong economic position compared to other countries in the past four years,” the statement said. “Qatar fared well throughout 2011 despite the global economic downturn and the Eurozone debt crisis. In 2012, the country’s general outlook remains positive.”
The most lucrative sectors for MENA for the next five years will be commodities such as ore, lead, rice, wheat and iron ore.
“The region is also developing its own dairy sector and building trade routes from Europe and Africa to enhance its food security and self-sufficiency,” said the report.
“This is shown in the 9.39 percent forecast growth in that sector.”