The latest PwC Middle East Economy Watch, which assesses the current economic landscape across the Middle East, has found that the regional economy remains resilient despite challenges from oil cuts and geopolitical turbulence.
The report explored three key themes: Oil output cuts and non-oil sector resilience, trade corridors and green financing.
PwC noted that OPEC+ members have agreed to extend production cuts into the second quarter of this year, recognising slower growth in demand for oil, alongside the risk of increasing supply from non-OPEC+ countries.
The production cuts mean that the oil sector will likely contract in 2024 compared to last year.
Saudi Arabia, it shared, has also paused its plans to increase oil production capacity given supply/demand dynamics.
However, this move will free up capital for investment in alternative energy projects, including gas and renewable energy sources, it said.
Qatar was noted for its expansion plans for its liquefied natural gas (LNG) capabilities, particularly with the introduction of the North Field West project.
On trade corridors, the report noted that the disruption to Red Sea trade has revived discussions around the need for alternative trade corridors.
Here, it highlighted the two major trade routes proposed in recent years: India-Middle East-Europe Economic Corridor (IMEC) and Iraq’s Development Road, with both having their challenges and advantages.
Progress on either initiative is unlikely until the current conflict is resolved, it said.
On green financing, growing momentum was highlighted, following COP28 and the introduction of green finance frameworks in the region.
In 2023, for example, the issuance of green bonds and sukuk in the Middle East doubled to $24bn, led by the UAE and Saudi Arabia.
It shared that this momentum continues in 2024, with Oman publishing a Sustainable Finance Framework, and Qatar’s finance minister announcing at Davos that its debut green bond would be coming soon.
Saudi Arabia is also considering a sovereign green issuance, in addition to the large sums raised by the PIF, it noted.
Read the full report here.