The modern world economy is undergoing a profound shift from West to East and the emerging economies of Gulf nations are capitalising on this, according to experts who gathered at a forum in Dubai entitled The Shifting Centre of Gravity. Joanna Andrews went to find out more...
The primary focus of the forum was to explore the implications of a number of seismic shifts of power in world trade, economics and politics.
Referring to the forum, His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and President of the DIFC said, "Dubai provides the ideal setting to examine the challenges and opportunities that the global business community faces in these unprecedented times.”
“The crucial thing is for businesses - and governments - to understand these changes so that they can adjust and plan accordingly," he added.
The forum focused on the increasing importance of trade between India and China and the Middle East; the effect that regulatory changes in mature markets will have on global financial services; China's forthcoming leadership changes and the potential trade ramifications of the Arab Spring.
Much has been written about Dubai and its rapid emergence as the region’s leading hub for international trade, logistics, business and finance, and there are often questions about its sustainability. At the height of the financial crisis Dubai was in the headlines for all the wrong reasons. A few years on, it has proved it has got what it takes to succeed and compete with global financial centres and find itself back on the world stage.
His Excellency Abdul Aziz Al Ghurair, the CEO of Mashreq Bank who doubles up as Chairman of the DIFC Authority said in his opening remarks at the Forum that Dubai has the first mover advantage, “Dubai may not be the centre of the world, but DIFC is certainly the centre of the regional ecosystem… The UAE and Dubai has taken the lead in infrastructure. DIFC is a benchmark to others who want to create this.”
He praised the UAEs visionary leaders and referred to an ancient Japanese proverb, “Vision without action is a daydream. Action without vision is a nightmare.” Two things stand out, he said. The forward thinking vision of the leadership and the UAEs geographic position – sitting nicely between Europe and Asia and on the doorstep of Africa. “Our leaders leveraged on this to create a bustling centre of business.”
He added, “Today, the global economy is undergoing a paradigm shift. While Europe is struggling to stabilise and come out of a major economic crisis, we see a solid growth in the East – India and China.”
A recent report from global research and consulting firm McKinsey and Company said it took more than a millennium for the West, powered by the industrial revolution to take the centre stage of the global economy from the East. But warned it could take just a few decades to change that and shift the centre of the global economy back to Asia.
And the UAE wants to capitalise on this. “Today, we see the potential for growth on the East of Dubai – a geographical stretch where we have strong economic relations. While India is our top trading partner, China is among the top five trading partners of the UAE. So, while Europe stabilises, we could shift focus to the East for continued growth,” Al Ghurair added.
The UAE economy is showing impressive resilience with Dubai recording a steady improvement from a negative to two per cent growth in 2011 - and a projected 3.4 per cent growth in 2012 according to the International Monetary Fund’s latest outlook report.
A panel discussion at the DIFC Forum focused on infrastructure development for countries in the Middle East. The panel included of Dr Farouk Soussa, Chief Economist, Middle East at Citi; Jeff Singer, Chief Execuitve Officer, Dubai International Financial Centre Authority (DIFCA) and Jonathan Robinson, Managing Director, Head of Project Finance at HSBC. The group said the biggest factors contributing to optimism regarding economic growth in the Middle East is the more than $4 trillion in infrastructure projects planned (or already underway) across the region. Governments in the region are pursuing a wide range of projects, including housing, hospitals, roads, rail networks, ports and power plants.
The panel discussed the importance of healthcare investment in the region. “A sick workforce is an unproductive workforce, so healthcare infrastructure is paramount,” said Dr Soussa. He also warned against ‘building for building sake’ or what he referred to as the ‘white elephant projects.’ He used the example of projects in Qatar ahead of the World Cup. “It is all economically relevant; Qatar can afford to do these things whereas a country like Egypt can’t.”
Jeff Singer, CEO of the DIFC Authority said, “You look at what is going on in the Middle East, and you see all this building going on, all this infrastructure going up and you are kind of scratching your head and saying ‘well it’s a little bit crazy’.” He added “Well sometimes you need a little bit of crazy and what Dubai is getting out of it is being the undisputed business capital of the Middle East. It won.”
Meanwhile, infrastructure development is ploughing ahead in the UAE with many mega projects being unveiled. His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai has just announced plans to build Mohammed Bin Rashid City in Dubai - setting a new benchmark in urban development.
“Our vision is clear, our ambitions are big. The future does not wait for those who are hesitant. We do not anticipate the future. We build it,” he said.
Mohammed Bin Rashid City will feature world-class leisure facilities and provide an integrated environment for the development of entrepreneurship and innovation. The new city will comprise of four key components;
1) Family tourism – including hotel facilities and a park larger than London’s Hyde Park
2) Retail – to feature the world largest shopping mall
3) The Arts – the largest area for art galleries in the MENA region
4) An integrated environment for entrepreneurship and innovation in the region.