Daily News Egypt

Energy price shock, unemployment tops MENA’s regional risks for doing business: WEF - Daily News Egypt

Advertising Area




Advertising Area



Energy price shock, unemployment tops MENA’s regional risks for doing business: WEF

Report uses results of large-scale Executive Opinion Survey carried out by forum to detect how concerns about global risks differ across regions, countries


Economic risks such as the energy price shock, and unemployment or underemployment topped the 10 risks for doing business in the Middle East and North Africa (MENA) region, according to the World Economic Forum’s (WEF) Regional Risks for Doing Business report recently published.

The report uses the results of the large-scale Executive Opinion Survey carried out by the WEF to detect how concerns about global risks differ across regions and countries.

According to the report the top 10 risks in MENA are: energy price shock; unemployment or underemployment; terrorist attacks; failure of regional and global governance; fiscal crises, cyber-attacks; unmanageable inflation; water crises; illicit trade and finally the failure of financial mechanism or institution.

However, the survey results point to the deep fissures within and among many of the region’s countries. In Lebanon for example, the most cited risk to doing business was “state collapse or crisis”, with “terrorist attacks” second and “failure of national governance” came in third position.

Despite the dominance of geopolitical and economic risks in the region, but cyber-attacks are a growing concern as the regional economy becomes more sophisticated.

In Egypt’s case, water crises came in first place, while unemployment risk ranks second, followed by the energy price shock, and unmanageable inflation.

Likewise, unemployment came in the top three for four other countries the MENA: Bahrain, Morocco, Oman and Tunisia. Nevertheless, unemployment is a pressing issue in the region, particularly for the rapidly expanding young population: youth unemployment averages around 25% and is close to 50% in Oman.

On the other hand, security, domestic and regional fractures were prioritised in various countries, such as Tunisia, where “profound social instability” ranked first, and Algeria, where respondents ranked “failure of regional and global governance” first. While both Israel and Jordan, “terrorist attacks” topped businesses’ lists of concerns.

In Yemen, the country suffering from conflict, the gravity of conditions was reflected in the survey results, as there were spread of concerns that respondents prioritised from our list of 30 global risks, including: “failure of national governance”; “failure of regional and global governance”; “failure of financial mechanism or institution”; “failure of critical infrastructure” and “spread of infectious diseases”.

According the report, even though “energy price shock” has risen from second place last year to become the top-ranked risk across the region, this development needs to be balanced with the fact that “fiscal crises” dropped sharply in the survey rankings, from first position last year to fifth in 2018.

The report attributed this change to the fact that oil prices increased substantially between our 2017 and 2018 surveys, from around $50 to $75. This represents a significant fillip for the fiscal position of the region’s oil producers, with the IMF estimating that each $10 increase in oil prices should feed through to an improvement on the fiscal balance of three percentage points of the GDP.

However, vulnerabilities to swings in oil prices have not disappeared, and are particularly pronounced in countries where government spending is rising.

Saudi Arabia, is one of such countries, which the IMF estimated in May 2018 had seen its fiscal breakeven price for oil – that is, the price required to balance the national budget – rise to $88, 26% above the IMF’s October 2017 estimate, and also higher than the country’s medium-term oil-price target of $70–$80.

Consequently, Saudi Arabia remains one of five countries in the region that rank “energy price shock” as the top risk to doing business in our survey, along with Bahrain, Kuwait, Oman and Qatar.

A sharp rift in risks’ perception was witnessed in the United Arab Emirates,  where respondents focused on technology-related risks in a very similar way to their counterparts in Europe and North America, with “cyber-attacks” ranked first, “misuse of technology” in third place and “data fraud” in fourth.

The report indicates that the combination of increasing sophistication in the regional economy and a global trend towards increased corporate focus on cyber risks in particular, is evident in a number of other MENA countries. For example, “cyber-attacks” was ranked as the second most important risk in three countries other than the UAE: Israel, Qatar and Saudi Arabia.

Topics: energy price

Advertising Area

Advertising Area



https://dailynewssegypt.com/2018/11/20/energy-price-shock-unemployment-tops-menas-regional-risks-for-doing-business-wef/
Breaking News

No current breaking news

Receive our daily newsletter
Subscribe