Once again, the dawn of a new year is upon us. People will wonder what to do, what will happen and what can they expect. We, as humans, will rely on pundits to tell us what they think and yes most of what will be said will have a 50/50 chance of being as much right as wrong.
This year is going to usher in many seismic changes that might have lasting affects way beyond 2017. That said, here are what I believe will be significant issues that we will face both locally and to a certain degree internationally.
Oil. That black magic temptress. Last year, I said that the only way for oil is up. Guess what? That is the direction that it will go again. Now the movement might be marginal but it still will be on the ascend because no matter what turmoil might happen in the world, the demand for this luxurious liquid is still going to grow.
Another important factor is China’s removal of the one child policy. Imagine, now that the Chinese can have more than one child registered, how many more cars, fridges, washing machines, flights, nurseries, schools, clothes and pampers will be needed just to satisfy that increase in demand. Can you imagine just what the demand on plastic will be going forward year-on-year if China’s population grows even by 1 percent in 2017? That is equal to 13-15 million new mouths to feed and clothe. Still think demand for oil is not there?
Europe also will try to find its identity. With the French election coming up, and considering two new forces will play an indirect role on the outcome, that of Brexit and the election of Trump, it will be interesting to see where that leads France. Moreover, with Chancellor Angela Merkel running for yet another term amid the backtracking of her stance on Syrian refugees after her party lost in regional elections, potentially the two major forces of Europe — France and Germany — will move ever so slightly to the right. Not good for Europe. Not good for us.
At the same time, GCC governments will rethink their fiscal policies. Now that the regional governments have used the drop in oil to cut and reshuffle priorities, they will start to release more money back into the economy to slowly restart growth in the region. You will start to see projects that were put on hold slowly reignite again. This will happen with a more steady approach, while maintaining the grip they had on spending to avoid losing gains achieved from the fiscal cuts they committed to.
Dubai will be a positive exception. The emirate will gear up for a proper fiscal spend to get things going to ensure a very successful Expo 2020. The infrastructure will start from the third or fourth quarter of 2017, gearing up exponentially. Foreign companies will realise once again that Dubai is the place they want to be.
Meanwhile, with the price of alternative energies dropping so much that the cost per kilowatt of solar energy is now below 3 US cents, it is not an issue of if but when the industry will take off.
The ‘when’ depends on what is known as the ‘last mile syndrome’. That is to say, how can I get this cheap source of energy from the power plant to the home? This is still an expensive exercise that needs investment. Once that is solved, we will have the same revolution the internet went through when ADSL and fibre optic cable were introduced. On this issue, keep the light on. You would not want to miss it.
It would be remiss if I did not write something about what will be the most profound factor in 2017 —Trump. I can see a president who believes in himself and now has the vehicle to enact all that he wanted to do — or so he thinks. This gentleman has bruised and bashed all the key people in the most important venues that will determine how successful he will be in the first 100 days.
The people who will hold the key to President-elect Trump’s success are the Republicans in Congress. True, they don’t want to lose and, yes, they will help President-elect Trump, but only if it helps them and their agenda. Also, when he attacks the different US industries, does he think their board members will go quietly in the night without a fight?
For all intense purposes, here is a man who says things that he will not be able to fulfill unless he gets the US Congress on his side. This I can’t see unless he changes once again to suit the situation. Something he is quite apt to do.
Mishal Kanoo, deputy chairman (UAE and Oman) of Kanoo Group