Loading ...U.S. Exports to the Arab World Jump By 12 Percent to $65.3 Billion
MENA Region is Buffeted by Geopolitical Tensions, Economic Diversification, Evolving Energy Markets, and Escalating Impacts of Climate Change
According to data released last month by the U.S. Census Bureau, U.S. goods exports to the Arab world jumped 12 percent to $65.3 billion in 2023, marking the first year-on-year increase in U.S. exports to the Middle East and North Africa (MENA) since the COVID era in 2021. The new data were compiled by the National U.S. – Arab Chamber of Commerce (NUSACC), America’s top commercial gateway to the MENA region.
“American exporters are facing certain challenges in the region, tied primarily to supply chain bottlenecks, as well as the continuing tragedy in Gaza,” said David Hamod, NUSACC’s President & CEO. “But on the whole, economic growth in MENA is outweighing such challenges. This is good news for the U.S. export community, which is facing slowdowns in some other parts of the world.”
In 2023, the Top Five destinations for U.S. goods exports to MENA were the United Arab Emirates ($24.9 billion), the Kingdom of Saudi Arabia ($13.9 billion), the State of Qatar ($4.7 billion), the Republic of Egypt ($4.5 billion), and the Kingdom of Morocco ($3.8 billion). These five nations accounted for $51.8 billion in U.S. sales, representing approximately 80 percent of American goods exports to the Arab world.
At-A-Glance: Regional Trends
In 2023, the trade relationship between the United States and the MENA region underwent significant shifts propelled by geopolitical tensions, economic diversification efforts, evolving energy markets, and the escalating impacts of climate change. War in Ukraine continued to strain global supply chains, including food security, while the Gaza conflict and attacks in the Red Sea heightened regional instability, complicating trade dynamics.
MENA countries stepped up their efforts to reduce dependence on oil exports by investing in high technology, renewable energy, and infrastructure development (including tourism megaprojects). These initiatives take into account the growing impact of climate change as it affects the Arab world. (For example, some research suggests that parts of the MENA region may become uninhabitable by 2050 due to heat waves and water shortages.)
The MENA region’s strategic pivots include diversified trade portfolios, opening the door to heightened competition from such global players as China and Russia, which are aggressively pursuing business opportunities and influence in the Arab world. (For example, Russia has exploited food insecurity across the region, shortages that were caused by – and exacerbated by – Russia’s invasion of Ukraine.) These strategic pivots underscore a period of significant transformation, one that presents both opportunities and challenges for U.S. stakeholders and their counterparts in the MENA region.
U.S. Foreign Policy Initiatives and the Arab World
In 2023, U.S. foreign policy generally aligned with commercial initiatives in the Arab world through strategic initiatives, economic partnerships, and geopolitical stability efforts.
For example, the U.S. Government in 2023 launched initiatives like the Partnership for Global Infrastructure and Investment (PGII), which will mobilize $600 billion over the next five years to support global infrastructure investments. This includes $3 billion from the Gulf Cooperation Council (GCC) for projects that deliver sustainable infrastructure and strengthen supply chains, intended to further integrate U.S. businesses into the region’s economic fabric.
In the area of security, which is crucial for trade routes and political stability, the U.S. Government and the Kingdom of Bahrain signed a Comprehensive Security Integration and Prosperity Agreement, the first of its kind in the region. This agreement enhances cooperation across a wide range of areas, from defense and security to emerging technology, trade, and investment.
At the Jeddah Security and Development Summit, U.S. President Joe Biden reiterated America’s commitment to the security and territorial defense of its Middle Eastern partners, emphasizing the importance of the region as a trade and technology crossroads.
Also at this summit, the USA committed $1 billion to long-term food security assistance for the MENA region. The USA has been a key player in the region’s food security initiatives. In a ministerial meeting of the United Nations, for example, the United States signed a Roadmap for Global Food Security – A Call to Action – with nine Arab nations.
In May 2023, the United States and Saudi Arabia signed an agreement focused on developing the Kingdom’s capacity to protect critical infrastructure and citizens from terrorist threats. Building on that initiative, the U.S. and Saudi Arabia signed an agreement in July 2024 to advance space exploration. This framework agreement on cooperation in aeronautics and the exploration of outer space for peaceful purposes will enhance discovery methods and technologies.
U.S. trade policies in 2023 prioritized such cutting-edge sectors as renewable energy, technology, and healthcare, aligning with the diversification goals expressed by many Arab countries. Such policies have had an important impact on trade with the Arab world by fostering economic partnerships, ensuring regional stability, and aligning with the region’s economic diversification goals. These efforts have created a favorable environment for trade growth, benefiting both U.S. and Arab economies through increased investment, increasingly secure trade routes, and robust economic frameworks.
Fast Facts
- 12.13 percent increase in U.S. goods exports to the MENA region in 2023.
- U.S. exports to 13 Arab countries increased in 2023.
- In 2023, the USA ran trade surpluses with the following countries: Bahrain ($496.3 million), Djibouti ($143.8 million, Egypt ($2.1 billion), Kuwait ($1.2 billion), Lebanon ($343.8 million), Mauritania ($158.2 million), Morocco ($2.1 billion), Oman ($211.4 million), Qatar ($2.6 billion), Somalia ($49.9 million), Sudan ($42.5 million), and Syria ($3.1 million), the UAE ($18.3 billion), and Yemen ($172.1 million).
- In 2023, the USA ran trade deficits with the following countries: Algeria ($1.8 billion), Comoros ($2.4 million), Iraq ($6.2 billion), Jordan ($1.4 billion), Libya ($1.1 billion), Saudi Arabia ($2.0 billion), and Tunisia ($302.0 million).
U.S. Exports Remain Strong, But Competitors Are Challenging U.S. Market Share
U.S. goods exports to MENA grew by 12 percent in 2023, but competitors are taking market share away from the United States, challenging U.S. economic interests in the region. China has been especially successful in such strategic fields as infrastructure, technology, and energy, giving that nation a “leg up” in its global competition with the United States.
Chinese exports to the Middle East have shown robust growth. From 2018 to 2022, according to the RAND Corporation, Chinese goods exports to MENA rose from $140 billion to $226 billion. While U.S. exports to the Arab world rose $65.3 billion in 2023, Chinese exports to the United Arab Emirates alone grew to $55.7 billion last year. China’s growing influence in the MENA region may be largely attributed to continuity, aggressive investment strategies, and comprehensive economic partnerships.
Because the global playing field is not level, there are numerous examples of Chinese firms outflanking their American counterparts. Prominent Chinese companies like Huawei, Alibaba, BYD, and Tencent have made significant inroads in the Arab world by tapping into strategic advantages and local business practices. For example, Chinese firms receive major support from the Government of China in the form of subsidies, low-interest loans, and favorable political and regulatory policies. Such backing allows Chinese firms to invest heavily in research and development (R&D) and to offer below-market pricing on products and services.
With a boost from their government, Chinese companies have established extensive and integrated supply chains. Such vertical integration helps those firms to create economies of scale that reduce costs and improve efficiency, giving Chinese companies a competitive edge over American firms that must rely on more fragmented and segmented supply chains.
China is not the only threat to U.S. market share in the Arab world. The European Union (EU) has long been recognized as one of the MENA region’s largest trade partners, accounting for over 30 percent of MENA’s two-way trade activities, according to the Economic Research Forum. Such partnerships affect U.S. trade by tying MENA closely to the EU through incentives and regulatory frameworks. For instance, EU trade agreements with countries like Morocco, Tunisia, Jordan and Egypt provide preferential treatment for two-way trade.
India’s increasing engagement in the MENA region, particularly in the energy sector, has significant implications. Total trade between India and the MENA region, primarily the UAE and Saudi Arabia, reached almost $130 billion in 2023, according to India’s Ministry of Commerce and Industry. Per India Briefing, approximately 60 percent of India’s crude oil imports come from the Gulf region, underscoring the importance of these relationships for India’s energy security.
In these days of food insecurity, India has become an important supplier of staples to the MENA region. Such sales are expected to increase through initiatives like the India-Middle East-Europe Economic Corridor (IMEC) and the Comprehensive Economic Partnership Agreement (CEPA), signed in 2022. The Arab world has longstanding ties to India, which is recognized as a rising power (and an alternative to the USA, China, and the European Union).
Oil Price Dynamics
Fluctuations in oil prices and revenues have always had a significant impact on trade volumes and “big ticket” projects in the MENA region. Lower oil prices in the first half of 2023 reduced disposable income, curtailing some imports from the United States. Conversely, higher oil prices in the second half of the year increased export revenues for Arab oil-exporting countries, enhancing their purchasing power for U.S. goods and services. This led to increased imports of high-value American products, such as machinery, vehicles, and technology.
Oil prices in 2023 experienced considerable volatility because of geopolitical tensions, global economic conditions, and strategic production decisions by OPEC+. The price of Brent crude averaged $83 per barrel (b) last year, down from $101/b in 2022, according to the U.S. Energy Information Administration (EIA).
Key events contributed to market volatility in 2023, such as the normalization (and subsequent deterioration) of Iran-Saudi relations, global pressure to transition to renewable energy, the ongoing conflict in Yemen, and the onset of war in Gaza. OPEC+ production cuts and global economic factors – including fears of recession and inflationary pressures – also played significant roles. Understanding these dynamics is crucial for U.S. stakeholders wishing to navigate the uncertainties of the MENA energy market.
Economic Diversification: MENA Helps to Lead Global Tourism Recovery
Tourism and hospitality are surging in the Arab world, a particular bright spot in the U.S. – Arab commercial relationship. Tourism has an outsized impact on local economies, supporting a wide range of businesses.
In 2023, tourism contributed significantly to the economic landscape of the MENA region, catalyzing trade and fostering economic growth. This resurgence of tourism in the aftermath of the COVID pandemic has been instrumental in encouraging U.S. commercial interest, evident in increased consumer spending and foreign investment.
In 2023, according to the World Tourism Organization (UNWTO), the Middle East led the global recovery in tourism, surpassing pre-pandemic levels by 20 percent. This impressive recovery was widely attributed to visa facilitation, the development of new destinations, world-class events that attracted visitors to the Arab world, and significant investments in tourism-related infrastructure.
In 2023, international tourist arrivals in the Middle East increased substantially, with tourist spending reaching approximately 93 percent of pre-pandemic levels. Some of this demand was driven by recent global events – like the World Expo in Dubai and the FIFA World Cup in Doha – and some of it was “home grown.”
For example, Saudi Arabia welcomed 53.6 million tourists in 2023, according to the Saudi Ministry of Tourism, which included 39 million domestic (Saudi) tourists. This represents an increase of 142 percent increase over 2022. Much of this growth was driven by visitors from Arab countries, who are keen to see the “new” Saudi Arabia as it opens up for tourists.
In 2023, according to the United Nations World Tourism Organization, travel and tourism created 27 million new jobs globally. This reflects a 9.1 percent increase over 2022, boosting domestic consumption and economic activity. The World Travel & Tourism Council says that this sector contributed 9.1 percent to global GDP in 2023, representing a significant recovery and an increase of 23.2 percent over 2022. In the MENA region, which is catching up fast, travel and tourism contributed 5.6 percent to GDP in 2023.
Tourism in the United Arab Emirates (UAE)
Dubai, Abu Dhabi, and the other five emirates of the UAE continue to be major tourism hubs, attracting millions of visitors. In 2023, Dubai alone received over 17 million international tourists, which bolstered retail and real estate sectors. Investments in mega-events like Expo 2020 are having longer-term impacts, drawing businesses and investors and enhancing trade relations.
| Visitor Numbers and Economic Impact • Dubai’s Record Tourism: Dubai welcomed a record 17.15 million international visitors in 2023, representing a 19 percent increase over 2022. This surge surpassed the previous high of 16.73 million visitors, recorded in 2019, according to the Dubai Department of Economy and Tourism. |
| Economic Contributions and Investments • According to the World Travel & Tourism Council: International visitor spending in the UAE reached AED 143.1 billion (approximately $39 billion) in 2023, demonstrating the substantial economic impact of tourism. This spending supports such sectors as retail, hospitality, medical, transportation, and others. |
These statistics illustrate how the resurgence of tourism in the UAE in 2023 has played a pivotal role in boosting the economy and enhancing trade by driving demand across various sectors and attracting significant foreign investment. The UAE’s innovative initiatives and robust infrastructure have positioned it as a leading global tourism destination, contributing to sustained economic growth and diversification.
Tourism in Saudi Arabia
In 2023, Saudi Arabia’s tourism sector experienced unprecedented growth, significantly impacting its economy and solidifying its position as a global tourism destination. The introduction of new tourist attractions, such as NEOM and the Red Sea Project, attracted global attention and significant foreign investment. These projects not only enhanced tourism, but they also stimulated such sectors as construction, engineering & design, hospitality, logistics, and transportation, creating a ripple effect that boosted trade and economic growth.
The Kingdom emerged as the most popular international travel destination for residents of the Middle East and North Africa (MENA) in the last quarter of 2023, according to the travel booking platform, Wego.
| Visitor Numbers • According to Gulf Business, Saudi Arabia recorded a 156 percent surge in international tourism arrivals in the first half of 2023, bringing the number of international visitors to 14.6 million. By year-end the number of tourists reached 53.6 million – including 39 million domestic tourists – amounting to a 142 percent increase over 2022. |
| Economic Contributions • Total tourism spending in 2023 reached SAR 150 billion (approximately $40 billion). Of this, SAR 86.9 billion (approximately $23.2 billion) came from inbound international tourism, while SAR 63.1 billion (approximately $16.8 billion) was generated by domestic tourism. $40 billion in tourism spending sets a new record in the Kingdom. |
| Tourism Growth • As a percentage of tourism growth 58 percent, according to Arab News, Saudi Arabia ranked second globally in tourist arrivals during the first seven months of 2023. The leisure segment saw an 18 percent increase over 2022, reflecting the Kingdom’s growing appeal as a leisure destination. |
The Kingdom’s substantial growth in tourism not only boosts Saudi Arabia’s economy, but also enhances its global standing. The influx of tourists fosters international goodwill and promotes cultural exchange, aligning with the broader goals of Vision 2030 to diversify the economy and reduce dependence on oil revenues.
Tourism also enhances geopolitical relationships. By hosting international events and welcoming tourists from diverse regions, Arab countries are strengthening their global ties. These relationships often translate into trade agreements and foreign direct investment, further integrating the Arab world into the global economy.
Growing Awareness of Climate Change
Climate change was “front and center” in MENA in 2023 as the UAE hosted COP 28, the world’s most important climate change conference (held under the UN Framework Convention on Climate Change). As if on cue, the Arab world in 2023 faced a number of climate-related disasters that significantly raised awareness and had an impact on the region’s socio-economic landscape.
Climate change is having a profound influence on trade with the Arab world, altering economic activities, disrupting supply chains, and prompting shifts in trade policies. For example, the increased frequency of extreme weather events, such as floods and heatwaves, have been disrupting supply chains. In 2023 and 2024, severe flooding in Libya, Oman, Saudi Arabia, and the UAE damaged infrastructure, leading to delays and increased costs for transporting goods.
Elsewhere, in Egypt and Morocco, climate change negatively affected agricultural productivity, which saw reduced crop yields due to droughts and water scarcity. This decline in agricultural output had an impact on food producers and exporters, thereby increasing reliance on food imports and straining trade balances.
Iraq and Kuwait – as well as other Gulf countries – have been experiencing heat indexed temperatures of 140 to 150 degrees Fahrenheit (60 to 65 Celsius), exacerbated by heat domes that lead to the highest water temperatures in the world. Such extremes cause widespread heat stress, increasing energy consumption for cooling and straining power grids.
Other countries in the region, like Jordan and Syria, have been facing severe drought conditions, exacerbating water scarcity issues. Such droughts have a significant impact on agricultural productivity, leading to reduced crop yields, heightened food insecurity and, in some cases, widespread hunger.
In addition, rising sea levels threaten low-lying coastal areas in such countries as Egypt, Tunisia, and the UAE.
But the MENA region, like other parts of the world, is working to tackle climate change head-on. Regional initiatives – like Masdar City in Abu Dhabi, Jordan’s Red Sea / Dead Sea Water Conveyance Project, and the Middle East Green Initiative in Saudi Arabia – demonstrate the region’s increasingly proactive approach to climate change. These initiatives serve to mitigate climate impacts, and they also create new opportunities for trade and investment in green technologies (creating sustainable infrastructure, fostering innovation, and encouraging economic resiliency).
The War in Gaza: Logistical Challenges
The war in Gaza – begun in October 2023 – has had a profound impact on trade and investment with the MENA region. The heightened state of conflict has created an environment of economic uncertainty, discouraging investment. Capital is a coward, as they say, and many businesses are reluctant to invest in the region due to perceived risks.
Israel and the occupied territories (Gaza and the West Bank) are facing the most severe economic impacts of the continuing tragedy in Gaza, but the economic consequences of this war extend far beyond the conflict zones. Neighboring countries – such as Egypt, Jordan, and Lebanon – are on knife’s edge, grappling with profound economic and political reverberations.
The conflict has disrupted trade routes and supply chains, for example, impacting the flow of goods and services. According to a recent estimate by Al-Mal News, Egypt’s revenues from the Suez Canal – through which about 15 percent of global maritime trade passes – is down 64.3 percent year-on-year (May 2023 to May 2024).
Because of violence related to Gaza, key ports have faced closures and operational restrictions, delaying shipments and increasing transportation costs. This has affected the timely delivery of goods, particularly perishable items and critical supplies. Logistical bottlenecks beyond the Suez Canal have had a major impact on the movement of goods through such vital trade routes as the Red Sea, Bab Al-Mandab, and the Strait of Hormuz.
The need for alternative trade routes has increased transportation costs, making U.S. exports less competitive than products from nearby regions. In addition, the conflict in Gaza has led to higher insurance premiums for shipments to and from the region, putting downward pressure on profits and trade activity.
The War in Gaza: Commercial Challenges
The tragic situation in Gaza has intensified boycotts against U.S. brands operating in the MENA region, as consumers seek to express solidarity with Palestinians and to pressure corporations to address human rights violations in Gaza.
According to Middle East Monitor, a global survey revealed that more than one-third of consumers are boycotting U.S. brands because of these brands’ perceived support for Israel. In the MENA region, these boycotts are posing significant challenges for such U.S.-based companies as Starbucks, McDonald’s, and Coca-Cola.
The tragic situation in Gaza is having an outsized impact on certain American brands, some of which are now being boycotted in the MENA region:
- According to the Financial Times, AlShaya Group – which operates Starbucks throughout the region – is on track to lay off approximately 2,000 employees because AlShaya’s net income has dropped by 15 percent so far in 2024.
- Americana Restaurants, the operator of KFC and Krispy Kreme in the Middle East, reported a 48 percent drop in first-quarter profits of 2024, according to Al-Monitor.
- According to The National – a media outlet based in the UAE – sales of local soda alternatives in Egypt have surged by 500 percent since October 2023 and a Jordanian coffee chain (Astrolabe) has seen a 30 – 40 percent increase in business.
- According to Bloomberg, funding for Israeli tech startups fell by 56 percent in 2023.
- CNBC says that McDonald’s has signed a deal to purchase all 225 restaurants that make up its Israel franchise, following months of reduced sales attributed to pro-Palestinian sentiment.
Amid escalating tensions and fears of broader conflict, the tourism industry – an economic driver for MENA nations – has been hit particularly hard, with widespread travel cancellations exacerbating economic challenges in the region.
- According to ForwardKeys (a travel data analysis company), as reported in The National, flight bookings to Israel plummeting by an annualized 61 percent in the second quarter of 2024.
- Countries close to the conflict have also recorded fewer inbound international travelers. According to The National, flight bookings for travel to Lebanon in the second quarter of 2024 fell 33 percent year-on-year, with bookings to Jordan and Egypt down 31 percent and 15 percent, respectively, so far in 2024 (based on data provided by ForwardKeys).
- Falling tourism revenues in Lebanon is having an impact on GDP. According to S&P Global: “For Lebanon, our data suggests that if tourism receipts were to fall by 10 percent to 30 percent, the direct loss to economic output could be up to 10 percent of GDP.”
While the war in Gaza (and potentially in Lebanon) has had a major impact on tourism in neighboring countries – like Egypt, Jordan, and Lebanon – tourism across the MENA region has shown resilience and adaptability, driving economic benefits. This is especially true for GCC countries, which are geographically distant from Gaza and are widely seen as safe and secure. According to Connecting Travel magazine, “Air connectivity [in 2024 has] increased 11 percent year-on-year in the UAE, meaning an extra 8.5 million seats were available than in the same period in 2023, contributing to increasing demand.”
“The issue of Palestine is once again front and center, for now. U.S. companies may expect pushback as a result of the Gaza tragedy at two levels. First, it will be more difficult for Arab governments to award certain contracts to U.S. firms because of the perception that the U.S. Government is “all in” for Israel in this conflict. Second, Arab families – especially youth – will send a message with their pocketbooks by boycotting certain U.S. products in solidarity with the Palestinians. In the short-term, at least, American companies may be in for a bumpy ride.”
– David Hamod, President & CEO, National U.S. – Arab Chamber of Commerce
(As quoted by The Atlantic Council in November 2023, shortly after the war in Gaza broke out.)
Deal Flow and Mega-Projects to Watch in the MENA Region
Mega-Projects in the MENA Region
(A Sampling)
Bahrain
1. Bahrain Metro Project: A proposed metro system to improve public transportation across the country.
2. Waterfront City: A mixed-use development project featuring residential, commercial, and leisure facilities.
Egypt
1. New Administrative Capital: A large-scale city development project to create a new administrative and financial capital East of Cairo, featuring government buildings, residential areas, and business districts.
2. South Med: Spanning 23 million square metres, “South Med” will feature over 2,000 hotel rooms and residential units, and a large international marina
Iraq
1. Basra Mega Sports City: A large-scale sports complex that includes stadiums, training facilities, and residential areas.
2. Baghdad Metro Project: A new metro system to alleviate traffic congestion and improve public transportation.
Jordan
1. Dead Sea Water Conveyance Project: A project to convey water from the Red Sea to the Dead Sea to address water scarcity.
2. King Hussein Bridge Terminal and Freight Yard project: This project, valued at approximately $228 million, is at the prequalification stage.
Kuwait
1. Madinat Al Hareer (Silk City): A $100 billion project aimed at creating a new urban area featuring a financial district, leisure facilities, and a new airport, aimed at transforming Kuwait’s economy.
2. Boubyan and Failika Island Development: A project to develop Boubyan Island into a logistics and transportation hub, with a focus on maritime trade.
Morocco
1. Irrigation Project in Boujdour: The mega project, covering a total area of 1,000 hectares with a total budget of MAD 310 million ($3 million), will irrigate 250 hectares in its first phase, distributed across 26 public-private partnership projects in the Laayoune-Sakia El Hamra region.
2. The Morocco Railway Program: $42 billion masterplan project, which is currently in the feasibility study phase. It is the largest transport infrastructure project in Morocco.
Oman
1. Sultan Haitham City: This urban development project includes the construction of streets, service roads, and pavements in the first phase. It aims to enhance the infrastructure and urban planning of Oman.
2. Ghubrah Desalination Plant – Phase III: Expanding desalination capacity to meet the increasing water demand in Oman, this project is a critical part of Oman’s strategy to ensure water security.
Qatar
1. Simaisma Project: A mega-entertainment district with an expansive amusement park, an 18-hole championship golf course, luxury villas, a state-of-the-art yacht marina, and an array of high-end restaurants and retail outlets.
2. North Field West (NFW) LNG project: Three greenfield projects, with a combined LNG production capacity, are expected to augment Qatar’s LNG production capacity by 85 percent from 77 million tons per annum to 142 mtpa by 2030.
Saudi Arabia
1. NEOM: A $500 billion mega-city project located in the northwest of Saudi Arabia, incorporating smart city technologies and aiming to be a hub for innovation and sustainable living.
2. The Red Sea Project: An ambitious luxury tourism and resort development along Saudi Arabia’s Red Sea coast, focusing on sustainable tourism and pristine environments.
3. Qiddiya City: One of the world’s largest entertainment, sports, and culture hubs.
United Arab Emirates (UAE)
1. Dubai Creek Tower: One of UAE’s most ambitious projects, this tower is slated to surpass the world’s tallest building (Burj Khalifa in Dubai).
2. Ciel Tower: The 365-meter structure will be the world’s tallest hotel, housing 1,042 luxury rooms and suites spread across 82 floors.
3. Palm Jebel Ali: A group of artificial islands comprised of 80 hotels, resorts, and other amenities spread across 13.4 square kilometers.
The MENA region has seen a significant rise in deal flow, particularly in merger and acquisition (M&A) activities, which indicates a robust economic landscape and growing investor confidence. Aside from becoming one of the world’s top sources of capital in the global financial world, the Middle East is currently experiencing a “seven-year upward inflow trend along with aggressive commitments to FDI and ample cash for investments,” according to the DLA Piper Journal.
The MENA region experienced a 42 percent increase in the total value of M&A deals in Q1 2023 compared to Q1 2022, reaching $25.8 billion across 165 deals, according to EY. This growth highlights strong capital market confidence, despite global economic uncertainties.
In 2023, M&A activity in the MENA region rose by four percent, with total deal values reaching $86 billion. The UAE and Saudi Arabia were key contributors, with significant investments driven by sovereign wealth funds focusing on national development and emerging sectors, as noted by Gulf Business.
The technology sector led in M&A activity, recording the highest number of deals (141). The chemicals sector saw the highest deal value, totaling $17 billion, reflecting strong interest in industries poised for future growth and innovation, according to EY. “North America remained the largest acquiring region by value, with transactions worth a total of $2.7 billion, and the highest number of inbound MENA deals, with 32,” noted Gulf Business.
The increase in deal flow in the MENA region for 2023 underscores a dynamic and evolving economic landscape, characterized by significant M&A activities and robust investment strategies. Key sectors – revolving around high technology and refining – are driving this growth, supported by the strategic investments of sovereign wealth funds. As the region continues to focus on diversification and modernization, increasing deal flow is continuing into 2024, offering a range of opportunities for traders and investors alike.
Conclusion
2023 was a seminal year for the Arab world. U.S. exports to the region surged on the strength of multiple megaprojects (led by Saudi Arabia). Such projects reflect the region’s focus on economic diversification, modernization, and sustainable development, positioning the Arab world as an important destination for global economic growth and innovation.
The MENA region has become the world’s latest hotspot for M&A activity, with sovereign wealth funds paving the way. In the same ebullient spirit, hospitality boomed in 2023 as regional and global tourists shook off the “cabin fever” that kept them at home from 2020 to 2022.
Political stability was a mixed bag. One country descended into chaos in 2023 (Sudan), and Gaza had (and continues to have) a profound humanitarian impact in MENA and worldwide. But for the most part, politics in the region remained relatively stable, enabling economies – and MENA residents – to emerge from the torpor of COVID.
Looking forward: The region’s trade landscape in 2024 is being shaped by a complex interplay of geopolitical, economic, technological, environmental, and regulatory factors. Addressing emerging challenges will require concerted efforts from governments, businesses, and international partners to ensure sustainable and resilient trade practices. The ability to navigate these risks will be crucial for maintaining trade stability and fostering economic growth in the region.
Against this backdrop of strategic initiatives and investments, the MENA region is positioned to enhance its role in global trade and investment. The region’s commitment to economic diversification, infrastructure development, and geopolitical stability will attract more global partners – including those from the USA – setting the stage for an increasingly robust and dynamic trade environment throughout 2024 and beyond.
(Fawaz Almudhaf, NUSACC’s Associate Director for External Affairs, contributed to this report.)
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