No one can ever confidently predict what will happen in the following 12 months, but forecasting 2017 is particularly difficult.
The surprises of 2016 (Brexit and the election of Donald Trump are at the top of the list but there were others, including the sacking of the entire Kuwaiti parliament, Saudi Arabia’s backflip on its oil production policy and the sudden demonetisation in India) demonstrate that we are living in particularly unpredictable times.
But while uncertainty hovers like a grey cloud over the globe, many in the GCC are cautiously optimistic that 2017 will afford at least a ray of sunshine in what may be a brighter picture by December.
The recent deal to cut oil production by 1.2 million barrels per day has, of course, set off 2017 with a head start. Oil prices are expected to continue to rise modestly as the year progresses, although anyone expecting above $60 will likely be disappointed; increased output of US shale will act as a lid on prices.
Whether those forecasts eventuate or not, there are a few things that are bound to occur this year — and beyond. They revolve around entrepreneurship and technology, and often but not necessarily together. As you will read in the predictions of some of the most influential people in the Gulf on the following pages, those two subjects, as well as the impact of oil prices and political changes, are paramount to the region’s future and cannot and will not be avoided this year.
Entrepreneurship is the driving force behind any economic recovery in GCC states. Thankfully, most of the GCC governments have doubled their efforts to not only support small and medium-sized businesses (SMEs) to enter markets but also to exit maturely and with the least damage to creditors.
The UAE’s much-anticipated bankruptcy legislation, due to come into effect early this year, has been praised as a necessary step to maturing the country’s companies legislation. While we should not expect a rush of applications, it will provide a level of comfort to SMEs and we could see some take greater risks.
On that note, be prepared to welcome more ‘disruptors’ and ‘unicorns’. Careem’s recent success in raising $350m — valuing the local ride sharing app at a potential $1bn — entirely from Gulf investors is evidence that start-ups, and disruptors, are here to make their mark.
The first few months of 2017 will also see a showdown in the region’s e-commerce market with the launch of noon.com, supported by $1bn and the might of the Saudi sovereign wealth fund and Dubai businessman Mohamed Alabbar. It will take on the already formidable Souq.com (which also raised $250m last February), while Amazon.com is still contemplating its own (arguably late) expansion into the region.
There is a never-ending list of start-ups ready to takeoff and we should be excited about what they will offer.
Let’s hope the key ingredient they need to do so — funding — also becomes more widely available. Low oil prices have crushed bank lending capabilities, leaving private equity (PE) firms to pick up the tab. Thankfully, PE in this region is often less risk averse than traditional banks, and as start-ups become more commonplace we should see even greater funding available to them.
Besides start-ups, technology is going to revolutionise all of our lives. In the next 12 months businesses can expect to see incredible developments in blockchain, robots, cloud computing, drones and all manner of other artificial intelligence applications, which promise to increase efficiencies and create opportunities for both existing and as-yet uncreated businesses.
Governments, meanwhile, will continue to juggle still-difficult budgets. While subsidy cuts have been implemented to varying degrees across the GCC, there remains room for more in countries such as Kuwait, Bahrain and Oman. Clawing back government entitlements will continue, alongside staff freezes and local employment programmes.
While we may not all like what is to come this year, there is no doubt it will be full of twists and turns, ups and downs. The best way to prepare for 2017 is to abandon all expectations.
