The ‘New Silk Road’ region, encompassing Asia, the Middle East, and North Africa (MENA), is poised for unprecedented growth and connectivity, significantly impacting travel and tourism. This area, home to 4.9 billion people and representing over 40% of the global economy, is poised for unprecedented growth and connectivity, significantly impacting travel and tourism. Economic Diversification in GCC Countries The Gulf Cooperation Council (GCC) countries, including the UAE, are leveraging the interconnected economies of Asia and MENA to diversify their economic bases. This strategic shift aims to reduce dependency on oil revenues by investing in various sectors such as financial services, logistics, tourism, technology, and manufacturing. The report emphasizes the critical role of high energy prices in facilitating this economic transformation. Key Themes in the Report Oliver Wyman’s report, titled “The New Silk Road – Growth, Connection, Opportunity,” outlines six major themes driving this growth: – Rising Interconnectivity: Increased trade and investment flows within the region. – Economic Diversification: GCC countries reducing reliance on oil through non-oil sectors. – Energy Transition: Shifting towards clean energy sources and reducing carbon footprints. – Technological Advancements: Embracing digital transformation and innovation. – Supply Chain Restructuring: Realigning supply chains to enhance resilience and efficiency. – Geopolitical Tensions: Navigating geopolitical challenges to foster regional stability and cooperation. These themes highlight specific action steps for private sector and government organizations to thrive in this evolving landscape. For instance, opportunities in China’s clean tech exports, energy transition financing platforms, and supply chain relocations are explored in depth. Strategic Plans and Regional Collaboration The report underscores the strategic plans of Saudi Arabia and the UAE, which are pivotal in driving regional growth. These long-term plans focus on enhancing economic opportunity through energy transition, addressing global supply chain disruptions, and navigating geopolitical tensions. The New Silk Road region is expected to account for 48% of global GDP by 2040, driven by these strategic initiatives. Significant Export Contributions The New Silk Road region plays a crucial role in global supply chains, holding significant export shares for semiconductors (86%), clothing (65%), and oil (40%). Major export manufacturers like China and Japan, along with emerging contenders such as India and Indonesia, are key players in this network. Increased connectivity is evident, with nearly 60% of trade activity occurring within the region. Free-Trade Agreements and Bilateral Relations On the regulatory front, the New Silk Road benefits from two of the world’s largest regional free-trade agreements: the Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Additionally, there is a rising number of bilateral agreements between Asia and the Middle East, further enhancing economic collaboration. Future Prospects and Investment Opportunities The report’s authors express confidence that, despite geopolitical and environmental challenges, the region will experience greater collaboration, connectivity, and capital growth. They envision a future where energy ties grow stronger, clean technology plays a more significant role, and manufacturing supply chains become more resilient. Investments in aviation and transport infrastructure are expected to support the increasing flow of people and goods, driven by a young, tech-savvy population. Strategies for Companies and Governments To capitalize on these opportunities, companies, investors, and governments must adopt new strategies, operating models, and mindsets. Private companies are encouraged to establish cross-market strategies, align with national priorities, and find suitable partners. Meanwhile, governments should leverage resources, such as sovereign wealth funds, to facilitate trade, investment, and technology flows, supporting private sector growth.
Unlocking the Potential of the ‘New Silk Road’ Region for Growth and Connectivity
