GrECo nova in the Middle East

 
A large and diverse region spanning several countries in north Africa and western Asia, the Middle East has an estimated population of over 411 million.  It is a complex region which sees vast power imbalances and huge inequalities: wealthy high-tech cities neighbour war-ravaged areas where world poverty and unemployment are at their highest.
 
Home to 53% of the world’s proven oil reserves and nearly half of all known natural gas reserves, oil, and natural gas power most of the Middle East’s economy.  However, in 2023, the region’s economic growth plummeted from 6% GDP in 2022 to only 1.9% in 2023.  This sharp deceleration has been attributed to reduced oil production and lower oil prices amidst tighter global financial conditions.  According to a report by The World Bank in October 2023, unemployment in the MENA region is nearly double that of other emerging markets and developing economies during an economic downturn.  It goes on to estimate that on top of the already high rates of unemployment here before the Covid-19 pandemic, the macroeconomic shocks of 2020-22 resulted in an additional 5.1 million people becoming unemployed.
 
The Middle East has been marred by geopolitical conflicts for decades and the situation is little different today.  The volatility of the region has generally had a substantial effect on economic policies and caused disruption to trade, technological innovation, and economic growth, however, in some circumstances, others have found opportunities amid the disruptions:  On the one hand there is an ever-present environment of uncertainty which deters direct foreign investment and causes capital flight. This uncertainty can lead to economic downturns, job losses, and business downsizing, particularly in countries dependent on tourism, like Jordan, Lebanon, and Egypt.  On the other hand, in certain scenarios, countries with significant natural resources, such as UAE, Qatar, and Saudi Arabia, have benefitted from geopolitical tensions because increased demand for oil during uncertain times has often led to higher prices, thereby positively impacting the economies of these countries.  As such, a nuanced understanding of the specific dynamics in each country is crucial for businesses operating in the region to navigate and respond effectively to these geopolitical influences.
 
The insurance industry in the Middle East is experiencing varied responses to the present geopolitical situation, with differences in the GCC (Gulf Cooperation Council) countries and others like Egypt, Lebanon, and Jordan. In the GCC countries, the insurance industry is reportedly stable and expanding, benefiting from the overall economic growth in these nations. The ongoing economic expansion contributes to increased demand for insurance products and services. Furthermore, economic growth in the GCC is often accompanied by efforts to diversify the economy. As a result, the insurance industry may be expanding its offerings to cover a broader range of risks associated with diverse sectors, contributing to overall industry growth.
 
In other countries (Egypt, Lebanon, Jordan), insurers are facing challenges to adapt by shifting the currencies in which insurance policies are paid. This strategic move can be a response to currency devaluation or economic instability in local markets, providing a measure of protection against economic uncertainties. Economic challenges in these countries may lead insurers to downsize their operations. This could involve streamlining staff, reducing overhead costs, and optimising operational efficiency to navigate financial constraints. To counter the impact of economic challenges, some insurers may be exploring opportunities to expand into new territories. This expansion could involve entering markets with more favourable economic conditions or less exposure to the specific challenges faced in their home countries.