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Middle East

There’s a clear shift in the Middle East towards sustainability, which has climbed to the top of policy agendas in the region. By looking towards sustainable financing, the Gulf Cooperation Council can seek to become a global hub for new technologies focusing on the green economy and enhance the region’s competitiveness in support of long-term economic growth while simultaneously protecting the environment.

A clear example is the purchase by Emirates Global Aluminium (EGA) of Clean Energy Certificates for 1.1 million megawatt hours of electricity supplied by EWEC to support production of CelestiAL solar aluminium. EGA became the first company in the world to produce aluminium using solar power in 2021, through an agreement with the Dubai Electricity & Water Authority. EGA produced almost 39,000 tonnes of CelestiAL last year and its customers for the metal include BMW Group and Hammerer Aluminium Industries, a Tier 1 supplier to Mercedes-Benz.

Saudi Arabia is likely to be one of the world’s fastest-growing economies this year owing to sweeping pro-business reforms and a sharp rise in oil prices and production which are powering the recovery from a¬ pandemic-induced recession in 2020. GDP is expected to expand by 7.6%, which would be the fastest growth in almost a decade.

Achieving a green future is a global necessity. Saudi Arabia aspires to enhance the quality of life and safeguard future generations both at home and beyond its borders. Working towards this goal, the kingdom is bringing together government ministries, private sector entities and foreign leaders under dual green initiatives to identify and execute opportunities for the rapid scale-up of climate action. The Middle East Green Initiative (MGI) is a regional effort led by Saudi Arabia to mitigate the impact of climate change on the region and to collaborate to meet global climate targets. By increasing regional co-operation and creating the infrastructure needed to reduce emissions and protect the environment, MGI can amplify impacts in the global fight against climate change.

Despite higher prices for imported commodities, inflation will remain contained at 2.8% in Saudi Arabia this year as the central bank tightens policy in line with the US Federal Reserve, according to the IMF. Public finances and the external position will strengthen substantially thanks to increased non-oil revenues and higher proceeds from oil exports. Reserve buffers will remain ample.

Reforms so that domestic fuel prices converge with international prices would generate fiscal savings as well as support the authorities’ climate objectives set out in the Saudi’s Green Initiative. Ongoing efforts to strengthen social safety nets through targeted schemes would protect the vulnerable from higher energy bills.

Freight rates have continued to fall amid slowing global trade volumes resulting from the shrinking demand for goods, according to latest data from S&P Global Market Intelligence. These falling freight rates are being felt in the Middle East. While rates have also dropped as a result of an easing of the supply chain disruptions that built up during the pandemic, a lot of the slowdown in container and vessel demand has been due to weaker cargo movements.

Rami Shahrour

SHARMETAL TRADING CO. S.A.R.L. (LBN), Board Member of the BIR Non-Ferrous Metals Division


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