“In fact, it has the potential to double by the end of the decade to $300bn,” said Simon Cooper, deputy chairman and CEO, HSBC Middle East & North Africa, at the HSBC Regional Exchange-MENA conference held recently. “By building on this opportunity for growing trade, MENA countries can accelerate the development of the non-oil and diversified industries and services necessary for sustainable, long-term economic success.”
According to HSBC Global Research, the GCC will earn more from oil over 2011-14 than it did in the previous 15 years combined. In 2013 alone, the value of the region’s oil production will be roughly five times greater than it was just a decade before. However, while oil export offers the region several short-to-medium-term advantages, alternative sources of growth and employment are required to promote more balanced, sustainable and competitive economies.
Tim Reid, regional head of commercial banking for HSBC MENA said,“We have already seen, and strongly support, the re-focus of public spending priorities to create an environment in which a private sector-led, non-oil economy can prosper and lead the next phase of the region’s development.
“For example, an estimated $4.3 trillion of infrastructure spending is scheduled for MENA before 2020. However there is much scope for growing levels of regional trade to play an important role in helping the region to become truly globally competitive.”
To help address the challenge, HSBC believes that the region must promote and nurture future export champions other than oil exporters, helping them find their feet in the home region before they compete on the world stage. Similar patterns have historically emerged around the world. British firms generally built their trade in Europe before starting to export to China; Indonesian firms sold to Malaysia before arriving in London; and American firms sold to Canada before turning to Mexico.
“MENA is an attractive market for businesses all over the world and the competition continues to heat up as multinationals continue to make their way here. The population is larger than the US and it has a greater proportion of under 25s than any other faster growing region. These two factors alone showcase an attractive opportunity for businesses from many sectors. There is also a positive outlook for economic growth, and we believe businesses in the region have a good opportunity to build the scale required to develop as prominent regional export champions,” said Reid.
Helping businesses grow across borders and facilitate trade has been a strong focus for HSBC both regionally and globally. The group aims to double its trade business in the medium term.
Reid concluded, “HSBC was founded on trade and throughout its history has been where the growth is, connecting customers to opportunities. Our strong heritage combined with HSBC’s global network and expertise, enables us to help businesses capitalise on growth and trade opportunities at home and abroad.”