History often shows that some of the most profound investment opportunities arise in places with deep and enduring trade ties – especially as times change.
Now could be one such pivotal period in history, with the nations established along one of the world’s most ancient business corridors key to shaping the new industrial future. An estimated $100 trillion investment boom between now and 2050 in power, industrial, and real estate projects is forecast as part of the global transition to Net Zero.
Around half of that capital is likely to be deployed in just two regions: the Middle East and Asia. That makes the economies along the path of the ancient Silk Road trade route – places with 2,000 years of trade, investment, and business connections – the focal point of what promises to be the most significant shift in the global economy since the Industrial Revolution’s dawn.
As the world’s largest trade bank with an international network covering 90 per cent of global GDP, trade and financial flows, the business activity we are supporting for our clients signals clearly that investors, entrepreneurs, and institutions are preparing for great change ahead.
Opportunities are evident across the economic spectrum in markets that will play an outsized role in the economic shift ahead. The economies of the GGCC are a showcase of the potential being created by ambitious, investment-led, economic diversification programmes.
A GCC epoch?
Having seen GDP growth accelerate to its swiftest in a decade in 2022, the GCC’s prospects are such that our economists forecast growth in 2024 at more than double the average annual rate of the previous five years. Selecting just one bilateral business corridor – the UAE and China – helps explain the scale of the potential.
Over the past 50 years, the UAE has developed into one of the world’s busiest hubs for international trade, logistics and aviation, and a centre of global investment and financial flows, real estate development, and tourism.
China, meanwhile, has built itself into the world’s second largest economy, becoming a giant in international trade and logistics, an expert infrastructure developer, and a global leader in renewable energy technology.
Non-oil trade between the two accelerated to $72 billion in 2022, up 18 per cent on 2021, while total trade reached a record high of $99.3 billion. Cumulative bilateral investment flows hit $12 billion in 2021 as business opportunities between the two flourished. The future opportunity is immense.
The UAE masterplan on growth
Meeting the key ambitions of the UAE government’s ‘We the UAE 2031’ plan will double the size of the economy by 2031, generating more than $200 billion in non-oil exports and raising the total value of trade above $1 trillion.
Meanwhile the Dubai government’s D33 programme makes enhancing foreign trade with Asia, as part of its Dubai Economic Corridors 2033 initiative, a key policy goal.
And the ambitions of the ‘Make it in the Emirates’ programme under the UAE’s ‘Operation 300bn’ industrial strategy to raise the industrial sector’s contribution to GDP to Dh300 billion by 2031 from Dh133 billion in 2021, make clean energy and industrial innovation key to advancing sustainable economic growth.
That means whether looking at trade, investment, financial markets, logistics, infrastructure, shipping, tourism or aviation, the UAE is a place where investors will see capital, talent and ideas come together, acquire momentum, grow, and flourish.
The conversations we have with our clients in China about the UAE focus on the potential of doing business in a place where such bold ambitions extend across the economic spectrum. Transformative investment opportunities abound and the power sector is a clear example.
The UAE is already one of the world’s leading lights in renewable energy, having invested around $50 billion in 70 countries to create installed renewable energy capacity of about 11GW. It has pledged to invest a similar amount at home and abroad over the coming decade.
Think about the potential when the UAE - one of the world’s most dynamic renewable energy investors - expands connections with China, the world leader in solar manufacturing capacity and capability.
That is just one of the ways in which the profound shift in opportunities heralded by the transition to Net Zero can be leveraged between places with strong, historic trade ties – and a shared experience of world-leading economic innovation, diversification, and development.
From the perspective of the geographies where some of the world’s most significant structural economic shifts have occurred over the past few decades – and are likely to occur again over the decades– now is the time to invest for the transition to come and take the lead in shaping a new industrial landscape.