Everyone agrees the coming year will be a tough one for the region’s economies. But some countries will fare much better than others because their decision makers were bold enough to seek out new opportunities and act upon them.
By Khalid W. Wazani
According to the Arab Strategy Forum which was held last month in Dubai, the main challenges the region’s economies will face over the coming year will be sluggish growth, a decrease in foreign investments, more economic pressure on non-oil producing countries, unpromising economic prospects, and uncertainty in oil prices for stable Gulf budgets. The only good news for non-oil producing countries is that their expenditure on oil imports will be less than last year, and that staple food prices will drop by roughly 20 percent worldwide.
So policy makers in a country like Jordan should be prepared for a tough year ahead. Successfully navigating such rough economic seas requires the foresight to focus on seeking out new opportunities, rather than further hiking taxes or adopting more contractionary policies.
The biggest opportunity today is that we are saving almost JD1 billion on our oil bill, and an additional couple of hundred of millions on the importation of staple food items and their subsidies. These funds should be used to expand capital expenditures in projects that could help the economy move forward. One way to do this is through the sovereign investment fund that HM King Abdullah has been pushing for. To this end, the government could in no time legislate for such a fund using the best practice in many countries regionally or internationally. The UAE, Kuwait, and many other countries have very successful examples in establishing and managing such funds. But we have to ask if we are really serious about moving the economy forward, or would we rather just do nothing and blame a stagnating economy on the socio-political and economic situation around us?
Experts at the Arab Strategy Forum said only those who know how to create opportunities in such a challenging world that will truly thrive. The chances are there for non-oil producing countries to use their excess money to stimulate their economies through injecting more domestic investment in areas that fit their competitiveness. To this end, the Jordanian government should immediately form a focus group of experts from the private sector to propose a list of new or ongoing investment opportunities that the new fund should target. Meanwhile, a proposed law for the new fund should be prepared and passed as soon as possible. Banking experts, business people, and investors should be consulted to decide on the projects that the fund should finance or invest in. These should include SMEs across all governorates of the Kingdom. By the time the law is passed, these potentially viable projects should be primed for financing. If not, 2016 will become the toughest year for the economy since the financial crisis of 2008.