Global Trade Analysis: Fuel Dependency in the MENA Region (Part 3 of 5)
Fuel has been, is, and will continue to be the MENA region’s most dominant export category. MENA countries export nearly 40% of the world’s fuel supply, and fuel makes up approximately 50% of the region’s exports. Global consumption of fuel has allowed the MENA region to grow in power over the last 50 years. However, these opportunities bring risk; fuel volatility can affect the region disproportionately to other more diversified economies. Therefore, MENA countries are seeking immediate diversification.
Today, the MENA Region Is Dependent on Fuel Exports
- Fuel is consistently just over 50% of the entire MENA region’s exports.
- There are major government initiatives within all MENA countries to continue diversifying their economies away from fuel dependence.
- In 2020, fuel remains the region’s top export.
KSA Is More Dependent on Fuel Exports Compared to Other MENA Countries, Including the UAE
- Fuel makes up approximately 80% of KSA’s yearly exports.
- Saudi Arabia’s Vision 2030 is to reduce the kingdom’s dependence on oil and diversify its economy, and to develop public service sectors such as healthcare, education, infrastructure, recreation, and tourism.
- Saudi Arabia’s economic evolution will also come with political considerations, as the kingdom continues to enhance its global positioning.
The UAE Is Least Dependent on Fuel as Its Major Export Compared to Other MENA Countries
- Fuel makes up approximately 20% of the UAE’s yearly exports.
- This is a result of the UAE’s ability to diversify its economy and increase its services, technology, and trading value.
- The UAE’s investment in free zones and open economic policies have attracted businesses to the region. These free zones include Abu Dhabi Global Markets (ADGM), Dubai International Financial Centre (DIFC), Dubai Multi-Commodities Centre (DMCC), and many more with specific industry focuses.
KSA Is Expected to Follow the UAE’s Diversification Strategy Through Its Vision 2030
KSA’s Vision 2030 is a framework to reduce Saudi Arabia’s dependence on oil and diversify its economy. This will be accomplished through investments in health, education, infrastructure, recreation, and tourism. The Vision 2030’s goals include reinforcing economic and investment activities, increasing non-oil international trade, increasing government spending on the military, and promoting a more secular image of the kingdom.
The Crown Prince Mohammed bin Salman Al Saud announced Vision 2030 on April 25, 2016.
The next part of our series will review the importance of food independence for the MENA region as well as steps governments are taking to develop agricultural capabilities.
Source: IAGS | The World Bank | IMF GCC Banking | IMF GCC Markets | IMF Trade and Foreign Investment | Saudi Arabia Vision 2030 | UAE Ministry of Finance