Turkish Trade Minister to Asharq Al-Awsat: Development of Joint Projects with Saudi Arabia Important for Cooperation in Africa

Turkish Trade Minister Ömer Bolat. Asharq Al-Awsat
Turkish Trade Minister Ömer Bolat. Asharq Al-Awsat
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Turkish Trade Minister to Asharq Al-Awsat: Development of Joint Projects with Saudi Arabia Important for Cooperation in Africa

Turkish Trade Minister Ömer Bolat. Asharq Al-Awsat
Turkish Trade Minister Ömer Bolat. Asharq Al-Awsat

Turkish Trade Minister Ömer Bolat has said Ankara attaches great importance to the bilateral economic relations with Saudi Arabia. In an interview with Asharq Al-Awsat, he also said that collaboration with the Kingdom, and the development of joint projects in the defense industry are of great importance for exploring cooperation opportunities in Africa.

Here’s the text of the interview:

1) What are the prospects for Saudi-Turkish economic, trade and investment cooperation? What are its fields? What are your expectations for the volume of bilateral trade in 2024?

We attach great importance to the bilateral economic relations with Saudi Arabia and we have already taken important steps in improving them with the guidance of political will exhibited by our leaders.

Our bilateral trade volume was recorded as 6,8 billion dollars in 2023. In the medium term, we can readily aim to reach a 10-billion-dollar trade volume. Our long-term target is reaching 30 billion dollars by diversifying the sectoral portfolio in our trade.

So far, Saudi firms have invested more than 2 billion dollars in Türkiye. We are open to cooperate with Saudi multinationals and the Public Investment Fund (PIF) to assess the feasibilities of Turkish companies that coincide with Saudi Arabia’s investment vision operating in various sectors.

2) What investment opportunities are available to the private sector in both countries? Is there a plan to maximize investment partnerships?

We closely follow developments within the scope of Saudi Vision 2030 aiming 3,3 trillion dollars of direct investment to diversify economic activity in the Kingdom. I believe that the growing motivation triggered by our “Century of Türkiye” vision and the Saudi Vision 2030 will create great synergy which would pave the way for significant economic benefits for our countries.

Turkish companies are willing to cooperate in line with Saudi 2030 investment vision including strategic sectors such as defence, renewable energy, machinery, building materials, automotive, aerospace, pharmaceuticals & biotech, medical devices and supplies.

Besides, we want our companies to take an active role in mega projects such as Neom, Diriyah Gate, Qiddiya, Red Sea Project within the scope of the Vision.

In the period of 2003-2023, the Turkish economy attracted more than a quarter trillion dollars of FDI. Türkiye stands out as having well equipped and young human capital, distinctive manufacturing capacity and quality as well as unprecedented geo-strategic location bridging Asia, Europe and Africa.

Further, since Türkiye has an ever-growing and strong economy thanks to being a superior and diversified industrial powerhouse, we operate a very dynamic investment incentive program.

It is worth mentioning that we strive for enhancing our investment climate constantly to encourage FDI and foreign investors. Our incentive scheme is tailored, project-based and comprehensive. Under every program, we evaluate each investment proposal one-by-one in line with the requirements of that specific investment project.

Investors can also tap into the potential of our free zones, and decent and completely objective legal structure guaranteed via mutual investment agreements. In this context, we expect more Saudi companies to benefit more from our country's incentive system and increase their investments in Türkiye within a wide range of industries.

Investment opportunities in Türkiye and Saudi Arabia vary across different sectors and industries. Both countries offer diverse investment opportunities across various sectors, depending on risk appetite, investment horizon, and expertise. In this regard, we believe there are many opportunities to exploit between our countries.

As it is well known, Saudi Arabia continues to accelerate the investment environment, which is being carried out under the socio-economic reform program known as “Vision 2030”. We follow this reform program very closely and strongly believe that there are many areas that we can cooperate and maximize our investment partnerships.

Accordingly, we believe that some sectors such as energy, transport and logistics, agriculture and food processing, tourism, industrial and manufacturing, financial services, healthcare and life sciences offer great potential and opportunities for Turkish investor companies. And also, we consider that joint investments between Turkish and Saudi companies will also enhance mutual cooperation opportunities. Therefore, we together with our private sector are ready to put our greatest effort to reveal the untapped potential between our countries and continue to work with Saudi Arabian partners.

3) To what extent do Saudi green initiatives provide to maximize cooperation in the green economy and climate?

Türkiye’s Customs Union with the EU which has been effective for nearly 30 years necessitates to closely monitor and align with the European Green Deal. Hence, Türkiye published its own Green Deal Action Plan, a comprehensive roadmap to a green, sustainable, and resource-efficient economy, in July 2021. In line with the Turkish Green Deal Action Plan, a series of initiatives aimed at promoting low-carbon production are in progress in Türkiye.

These include the establishment of a national ETS, the formulation of strategic roadmaps for low-carbon growth in relevant industries, alignment with newly developing EU sustainable product standards and the augmentation of R&D incentives. Furthermore, Türkiye is taking decisive steps to accomplish the transition to a circular economy and align with EU´s new technical legislation. As such, Türkiye is preparing its national Circular Economy Action Plan in priority sectors namely in textile, battery, construction products, plastics, packaging, food, electronics.

Establishment of new partnerships in wider area of policies, international cooperation and joint efforts will be defining factors for the successful implementation of climate change mitigation and adaptation policies to reach global climate objectives. In this regard, Türkiye is open to exchange of knowledge and experience sharing through international cooperation in innovation and R&D, as well as welcoming Saudi investments, in achieving global climate goals.

We attach great importance to collaborations both in the green transformation of industry and the transformation into clean energy, such as hydrogen blending into natural gas projects. In this context, we closely follow the projects initiated by Saudi Arabia within the scope of "Saudi Vision 2030", such as NEOM that envisages innovation and sustainability, and we are of the view that cooperation in such smart cities has a great potential in diversifying our economic collaboration. Further, we also attach utmost importance on collaboration in water use and wastewater management, within the scope of combating climate change.

4) To what extent is Türkiye prepared to cooperate with Saudi Arabia in the defense industries sector? Is there a common desire to launch projects in Africa?

Our country's defense and aerospace industry has achieved significant milestones with over 80,000 employees and an annual production value of $12 billion, exporting $5.5 billion to 180 different countries and regions. Our exports, which stood at $4.36 billion in 2022, increased by 27%, reaching $5.5 billion in 2023. Our defense and aerospace industry’s share in our country's exports is progressively rising, reaching 2.2% in 2023.

These remarkable accomplishments in our defense and aerospace industry indeed offer opportunities to enhance cooperation with friendly and allied nations. Collaboration with strategic friends in the region, such as Saudi Arabia, and the development of joint projects in the defense industry are of great importance for exploring cooperation opportunities in third countries and regions like Africa.

During the last two decades, Türkiye has achieved an unprecedented leap in defence industry solidified with innovative and high-tech product groups in a wide array of military equipment. We also know that Saudi Arabian Military Industries has an objective to become one of the top 25 defence companies in the world by 2030.

As being the countries having ambitious goals in defence industry, we endeavour to enhance our defence cooperation in various ends. In this respect, we have strong cooperation between our Ministry National Defense and Ministry of Defense of Kingdom of Saudi Arabia.

During our President H.E. Erdogan’s visit to Jeddah in July 2023, Mr. President and Saudi Crown Prince Mohammed bin Salman attended the signing ceremony between Turkish defense firm Baykar and the Saudi defense ministry regarding the procurement of AKINCI unmanned (combat) aerial vehicles as the biggest defence export contract in Türkiye’s history. This agreement is also important from the aspect of ensuring technology transfer and joint production which would advance the high-technology development capability of the two countries.

Besides, during the same visit, “Implementation Plan” was signed, and we believe that this road map will not only facilitate G2G relations in the field of defense but also have a potential to boost bilateral trade and mutual investments as a whole.

5) What is the government plan to strengthen the economic, trade and investment in Türkiye?

The Medium-Term Program (MTP) for the years 2024-2026 was published in the Official Gazette on September 6, 2023. As you may know, the MTP outlines a three-year perspective for public institutions in Türkiye.

The MTP aims to address the aftermath of disasters, reduce disaster risks, ensure macroeconomic and financial stability, target sustainable price stability with a focus on combating inflation, and prioritize investment, employment, production, and exports.

We are confident that our economy will successfully navigate any obstacles within the framework of the Plan outlined above. A crucial element in achieving disinflation is the ongoing enhancement of the current account balance, representing a significant structural transformation. Additionally, I would like to highlight our commitment to prioritizing investment and exports as essential components of our strategy to combat inflation.

During the Program period, our export targets are $267 billion in 2024, $283.6 billion in 2025, and reaching $302.2 billion by the end of the program period in 2026. Likewise, our import estimations are $372.8 billion in 2024, $388.9 billion in 2025, and reaching $414 billion by the end of the program period in 2026.

Therefore, during the program, we aim to gradually reduce the current account deficit, expected to be $34.7 billion in 2024, to $31.7 billion in 2025, and $30 billion in 2026. Thus, the share of the current account deficit in GDP will decrease from the 2024 level of 3.1% to 2.3% by the year 2026. In this path, as the Ministry of Trade, we are effectively utilizing our existing support mechanisms to achieve our export goals.

To achieve the targets set in the Program, as the Ministry of Trade, we are continuing our efforts with determination to implement the policies and measures outlined in the Program in effective coordination with our relevant stakeholders.

We aim to strengthen the production capacity in our country through technological transformation to achieve sustainable improvement in the current account balance. In this way, we target higher economic growth while reducing import dependency.

Furthermore, we are implementing efforts within the Green Transformation, such as clean energy, reducing energy costs, implementing waste-preventive policies, and enhancing efficiency and effectiveness in policies and practices through Digital Transformation.

We are working on enhancing the capacities of our customs and free zones, which are significant operational areas for foreign trade, to increase their effectiveness.

Especially with the renewal of customs administrations, border gates, and the improvement of processing capacities, we are facilitating the export processes of our country.

In order to achieve growth that supports investment, employment, production, and exports, we are implementing reforms in coordination with monetary, fiscal, and income policies by establishing a more favorable structure for improving the business and investment environment in Türkiye and ensuring sustainable growth. For example, technology-focused investments will be supported.

As the Ministry of Trade, we are aware of how crucial our producers and production are for our country's economy.

Therefore, our duty is to facilitate the work of everyone who contributes to production and the Turkish economy, support them and pave the way for them.

In addition to the Medium-Term Program (MTP), the Twelfth Development Plan (2024-2028) has been prepared with an inclusive approach involving public institutions, the private sector, representatives from NGOs, and academia. It was ratified by the Grand National Assembly of Türkiye and published in the Official Gazette dated November 1st.

In the new century of Türkiye, it has been emphasized that the Twelfth Development Plan, designed with a long-term perspective within the framework of the 2053 vision, will serve as a comprehensive roadmap. It aims to ensure the achievement of our development goals by taking into account the fundamental values and expectations of our nation. It is also highlighted that our main goal will continue to be raising our country above the level of contemporary civilizations.

The plan has been prepared with the vision of ‘an environmentally friendly, disaster-resistant, high value-added, distributing fair income, stable, strong, and prosperous Türkiye’ in the century of Türkiye.

In line with this vision, it is envisaged that a stable growth model will be implemented, focusing on green and digital transformation, with the industrial sector playing a leading role integrated with the agriculture and services sectors. It is foreseen that this model will strengthen Türkiye’s position in global trade, provide access to quality financing opportunities, and create maximum employment.

This plan is comprised of 5 main axes: ‘Stable growth and a strong economy’, ‘Competitive production through green and digital transformation’, ‘Skilled workforce, strong families, and a healthy society’, ‘Living quarters resistant to disasters, sustainable environment’, and ‘Democratic governance founded on principles of justice’.

In the plan, there is also an attempt to outline a long-term strategy for the year 2053. In this context, the aim is to achieve structural transformations that promote the global competitiveness and innovativeness of the Turkish economy as a high-income country on a global scale. The goal is for Türkiye to rank among the top 10 economies in the world by 2053 and among the top 5 economies according to purchasing power parity. On the other hand, it is expected that by 2053, Türkiye’s share in global merchandise trade will exceed 2%, and this percentage is anticipated to increase when including trade in services.

Within the framework of the 2053 vision, it is anticipated that Türkiye will maintain its position as the largest country in Europe in terms of agricultural national income, while also ranking 7th among countries worldwide.

During the planning period of 2024-2028, an average annual growth rate of 5 percent is expected. By the end of the plan period, the aim is for per capita income to reach $17,554, with per capita national income in terms of PPP exceeding $58,000. It is projected that an additional 5 million jobs will be created during the plan period, paving the way for a decrease in the unemployment rate to 7.5% by the end of the period. On the other hand, the Consumer Price Index (CPI) is targeted to be 4.7% in 2028. Furthermore, the Gini coefficient, which was 0.401 in 2022, is aimed to decrease to 0.380 during the plan period.

With the policies and measures to be implemented during the plan period, it is expected that exports will reach $375.4 billion and imports $481.4 billion, respectively. Additionally, with the targeted increase in tourism income, the current account deficit to GDP ratio is projected to be 0.2% at the end of the period.

At the end of the planning period, it is targeted that the need for borrowing by the public sector, as a percentage of GDP, will be 1.8%, the general government deficit will be 1.8%, and the central government budget deficit will be 2.0%.

In the plan, it is expected that Türkiye's share of world merchandise exports, which was 1% in 2022, will increase to 1.3% by the end of the period.

6) What are the most prominent challenges facing the trade, investment in the country? What are the ways to confront it?

As is well known, 2023 was a sluggish year for global production and trade. High inflation, rising commodity, energy and food prices, the climate crisis, the Russia-Ukraine War, the Israeli massacre in Palestine and disruption to shipping routes through the Red Sea has significantly mounted the risks on the global economy.

We think that such issues having global impacts can only be properly tackled with global cooperation. Türkiye has always actively engaged and on the forefront in finding the ways of settlement with the cooperation among all countries. We have started certain landmark initiatives such as Grain Corridor, encouraging global support for Palestine and zero waste policy as part of the endeavours for combating climate change and ensuring globally circular economy.

As the Ministry of Trade, we attach importance to continuing our work and planning in this direction to make the “Century of Türkiye” also the "Century of Trade Diplomacy" and to be present everywhere in the world with the policies we implement. We continue to take further steps to improve our trade relations with Saudi Arabia. In this context, we aim to bring our bilateral trade relations to better points by minimizing the bureaucratic obstacles, as well as solving problems encountered by our companies in both countries.



UAE, Jordan Sign $2.3 billion Aqaba Rail Project Deal

UAE, Jordan Sign $2.3 billion Aqaba Rail Project Deal
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UAE, Jordan Sign $2.3 billion Aqaba Rail Project Deal

UAE, Jordan Sign $2.3 billion Aqaba Rail Project Deal

The United Arab Emirates and Jordan signed on Wednesday an agreement to launch a $2.3 billion rail project to Aqaba port and to create a joint company to build and operate it, the state news agencies in both countries reported.

The agreement covers the construction and operation of a 360-kilometre railway linking the mining areas of Al-Shidiya and Ghor Al-Safi in Jordan to its Aqaba port.

The project aims to transport 16 million metric tons of phosphate and potash annually, with a total investment value of $2.3 billion.

As part of the agreement, the UAE–Jordan Railway Company was launched as a joint venture between several Jordanian stakeholders and L’IMAD Holding Company, Abu Dhabi's newest sovereign wealth fund, the UAE 's state news agency said.

The project is the first step in building the Jordanian national railway network project to connect Aqaba with neighboring Arab countries, and to link the port with those in Syria and the Mediterranean, the Jordanian state news agency said.


Chaired by Saudi Crown Prince, PIF Board of Directors Approves PIF 2026-2030 Strategy

Saudi Crown Prince Mohammed bin Salman - SPA
Saudi Crown Prince Mohammed bin Salman - SPA
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Chaired by Saudi Crown Prince, PIF Board of Directors Approves PIF 2026-2030 Strategy

Saudi Crown Prince Mohammed bin Salman - SPA
Saudi Crown Prince Mohammed bin Salman - SPA

The Public Investment Fund (PIF) Board of Directors, chaired by Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince and Prime Minister, has approved PIF’s 2026-2030 strategy, a continuation of the fund’s long-term strategy that will focus on delivering competitive domestic ecosystems to connect sectors, unlock the full potential of strategic assets, maximize long-term returns, and continue to drive the economic transformation of Saudi Arabia and further enhance the quality of life of its citizens.

The 2026-2030 strategy marks a natural evolution as PIF moves from a period of rapid growth and acceleration to a new phase of sustained value creation, with a strengthened focus on maximizing impact, raising the efficiency of investments, and applying the highest standards of governance, transparency and institutional excellence. In addition, PIF will further enable the role of the private sector as an effective partner for sustainable economic development, according to SPA.

Under the 2026-2030 strategy, PIF has structured its investments into three portfolios. The Vision Portfolio aims to leverage synergies across strategic sectors, maximize value for PIF portfolio companies, and continue to drive the growth of the local economy. It will contribute to national priorities through the delivery of six competitive domestic ecosystems and by further integrating PIF’s investments. The Vision Portfolio will unlock new opportunities for the domestic private sector as an investor, partner, and supplier, to further enable its role as an effective partner for sustainable economic development, while also attracting global partners and investors.

The six ecosystems include: Tourism, Travel, and Entertainment; Urban Development and Livability; Advanced Manufacturing and Innovation; Industrials and Logistics; Clean Energy, Water, and Renewables Infrastructure; and NEOM.

The Strategic Portfolio will actively manage key strategic assets to maximize financial returns and the economic impact of PIF’s companies, while supporting their efforts to attract capital and become global champions. Through the Strategic Portfolio, PIF will also continue to invest in opportunities arising from long-term global trends.

The Financial Portfolio will focus on delivering sustainable financial returns to further strengthen PIF’s financial position and continue to grow national wealth for future generations. It will manage PIF’s direct and indirect investments in global markets to maximize returns, while building a more diversified and resilient portfolio. It will further strengthen strategic international partnerships to help attract capital and increase access to global investment opportunities.

PIF Governor Yasir Al-Rumayyan said: "PIF’s strategy continues to deliver results as we grow domestically and internationally. In less than a decade, we have launched unprecedented projects, including giga-projects and major real estate developments, in addition to unique investments in strategic sectors such as artificial intelligence, gaming and esports, and renewable energy. PIF also grew assets under management six-fold and attracted global partners and capital to take part in Saudi Arabia’s transformation."

He added that PIF will continue to support Saudi Vision 2030 objectives by delivering competitive domestic ecosystems, investing in national champions that have the potential to scale globally, and forming global economic partnerships, building on what has been achieved under PIF’s 2021-2025 strategy.

"The 2026-2030 strategy is a natural next step in PIF’s growth journey. It offers our partners more opportunities to invest in high-quality assets and ecosystems, alongside PIF. In the next five years, we will continue to build on our great achievements and strengthen our global leadership to deliver success for PIF and Saudi Arabia," Al-Rumayyan said.

PIF will continue to invest with agility in both local and international markets and maintain its ability to respond to emerging opportunities that benefit the local economy and impact an ever-shifting global economy. It will maintain a disciplined focus on value realization, sustainable returns, enhanced capital efficiency and the highest institutional standards, as it drives innovation and advanced utilization of data and artificial intelligence.

PIF’s 2026-2030 strategy provides a clear strategic direction for the coming decades. It also strengthens PIF’s position as a local and global investor, with a diversified and resilient portfolio that contributes to Saudi Arabia’s long-term economic prosperity. PIF’s unique mandate will remain the same: to drive the economic transformation of Saudi Arabia and generate sustainable financial returns.

The strategy builds on the substantial progress and achievements delivered by PIF under its previous strategies, including increasing grown assets under management from $150 billion in 2015 to more than $900 billion; achieving an annualized total shareholder return of over 7% since 2017; investing more than $199 billion in new projects in Saudi Arabia from 2021 to 2025; contributing more than $243 billion to real non-oil GDP from 2021 to 2024, equivalent to around 10% of Saudi Arabia’s total non-oil GDP in 2024; spending together with its portfolio companies more than $157 billion with the local private sector from 2021 to 2024; expanding PIF’s global presence in priority markets with subsidiary company offices in North America, Europe, and Asia to deepen PIF’s ties in international markets and continue to invest in sectors, industries, and companies shaping the future of the global economy; and being one of the few sovereign wealth funds with strong credit ratings from each of the world’s top three rating agencies. Moody’s rated PIF Aa3 with a stable outlook, while Fitch rated PIF A+, also with a stable outlook


World Bank to Asharq Al-Awsat: Saudi Arabia Plays a Central Role in Stabilizing Energy Markets

A cargo ship in the Gulf, near the Strait of Hormuz, March 11, 2026. REUTERS/Stringer/File Photo
A cargo ship in the Gulf, near the Strait of Hormuz, March 11, 2026. REUTERS/Stringer/File Photo
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World Bank to Asharq Al-Awsat: Saudi Arabia Plays a Central Role in Stabilizing Energy Markets

A cargo ship in the Gulf, near the Strait of Hormuz, March 11, 2026. REUTERS/Stringer/File Photo
A cargo ship in the Gulf, near the Strait of Hormuz, March 11, 2026. REUTERS/Stringer/File Photo

At a time when geopolitical tensions are disrupting the stability of vital maritime corridors, fundamental questions are emerging about the ability of major economic ambitions in the Gulf to withstand the test of the Strait of Hormuz, which is an indispensable “lifeline” for the global economy, said Roberta Gatti, Chief Economist for the Middle East, North Africa, Afghanistan, and Pakistan at the World Bank.  

In remarks to Asharq Al-Awsat, Gatti warned that current geopolitical tensions place the region’s economic diversification ambitions under a real test, while stressing, on the other hand, the central role Saudi Arabia plays in global energy markets through measures aimed at enhancing the reliability of supply chains.  

The Kingdom’s efforts extend not only to exporters, but also to inflation, trade, and global growth, she added. 

Last week, the World Bank issued a report ahead of the Spring Meetings of the World Bank and the International Monetary Fund, in which it maintained Saudi Arabia at the forefront, with projected growth of 3.1 percent in 2026, highlighting it as the Gulf economy most capable of coping with the repercussions of the current geopolitical crisis, despite sharp revisions affecting regional estimates.  

Data in the report also showed that the fiscal deficit is expected to narrow by half to 3 percent, from 6 percent in 2025, alongside a shift in the current account balance from a deficit of -2.7 percent to a surplus of 3.3 percent.  

Roberta Gatti, Chief Economist for the Middle East, North Africa, Afghanistan, and Pakistan at the World Bank. (World Bank)

On Monday, the United States imposed a naval blockade on Iranian ports, in an attempt to increase pressure on Iran to reopen Hormuz following the collapse of peace negotiations in Pakistan over the weekend. The negotiations are expected to resume in the coming days. 

Gatti stressed: “Saudi Arabia plays a central role in global energy markets, and its efforts to strengthen resilience are especially important at a time of heightened uncertainty around the Strait of Hormuz.” 

“Measures that enhance the reliability of energy supply chains - whether through infrastructure investment, alternative export routes, spare capacity, or stronger logistical preparedness - can help reduce the risk that such shocks translate into broader global disruption,” she added.  

“These efforts matter not only for reducing volatility in global oil and gas markets for the benefit of the exporters, but also for global inflation, trade, and growth, especially in energy-importing developing countries that are highly vulnerable to volatility of these markets.” 

Economic Diversification Under Stress Test

Gatti said the current conflict has directly highlighted the strategic importance of economic diversification, which is a core objective adopted in national development plans across GCC countries. She pointed out that data recorded since February 28 clearly reflects this divergence, stating: “The current conflict has highlighted the importance of economic diversification, an objective mentioned in multiple National Development Plans of GCC countries.” 

“Since February 28, relatively more diversified economies, such as the UAE and Bahrain, have seen their forecasts downgraded significantly less than those of less diversified economies, such as Qatar and Kuwait. In addition, these larger forecast downgrades for Qatar and Kuwait reflect their higher reliance on route that goes through the Strait of Hormuz for trade and energy exports and the lack of alternative bypass routes.” 

The World Bank expects Qatar’s economy to contract by 5.7 percent, marking a downgrade of 11 percentage points from previous estimates due to damage to liquefied natural gas supplies. Kuwait’s economy is also expected to contract more sharply by 6.4 percent, given its 100 percent reliance on the Strait of Hormuz for oil exports, making any closure of the waterway equivalent to a complete halt of the country’s financial lifeline.

In contrast, the UAE and Oman are expected to grow by 2.4 percent each, while Bahrain is expected to grow by 3.1 percent.

In this context, Gatti said: “The ‘Vision’ strategies remain appropriate and important as they aim to reduce structural dependence on hydrocarbons and promote private sector-led growth, but, as these recent events show, their implementation is sensitive to external shocks and the impacts are likely to be uneven across the region: more diversified economies tend to be more resilient due to stronger fiscal buffers and deeper non-oil sectors.” 

“It also matters greatly into which new sectors the economies are diversifying. For example, prolonged instability could dampen investment and further disrupt tourism, aviation, and logistics sectors which have been expanding rapidly in the region. In contrast, sectors like banking and finance have been more insulated,” she explained. 

The commercial port of Yanbu is one of Saudi Arabia’s current key maritime gateways. (Mawani)

Energy Poverty

Gatti turned to the more severe dimension of energy market volatility, explaining that rising oil prices impose compounded pressures on developing importing countries, as they translate directly into higher electricity costs, more expensive public transportation, and rising food prices linked to increased fertilizer costs.

She noted that these pressures inevitably lead to wider trade deficits and greater strain on public budgets, particularly in poorer countries with limited reserves, which are forced to bear significant fiscal costs if they attempt to subsidize energy prices to ease the burden on citizens.

Gatti further noted that reliable and affordable energy is not merely a service, but a lifeline for both households and firms. In this context, volatility in fuel and gas markets delivers a “double hit” to these economies, as households struggle to meet basic needs while firms face more expensive and less reliable energy, making industrial expansion slower, riskier, and less competitive.

In this sense, sharp short-term price increases may not only have immediate effects, but could also disrupt long-term structural transformation in energy-poor developing economies, she told Asharq Al-Awsat.

“The resilience of economies to withstand oil and gas shocks depends on exposure and vulnerability of their economic structures. Degree of reliance on imported energy matters, and so do reliance on energy-intensive sectors, and how consumers, firms, and government adapt to rising prices,” she remarked.

The 'Cost' of Alternative Energy Routes

Addressing the need to invest in land corridors or pipelines that bypass narrow maritime chokepoints, Gatti said the decision requires a careful balance between economic efficiency and resilience. “Decisions on such investments must balance consideration for economic efficiency and resilience to shocks. The concentration of oil and gas export routes from the Gulf through the Strait of Hormuz suggests that this is likely the most economically efficient option, given geography and other technical and economic considerations. On the other hand, diversifying trade routes brings resilience to shocks.”

For example she highlighted that Saudi Arabia can “divert a portion of their oil exports to the Red Sea port of Yanbu via the East-West pipeline, with 7mbpd capacity. The UAE similarly has Habshan-Fujairah pipeline with 1.5-1.8mbpd capacity to bypass Hormuz.

Conversely, the Kirkuk–Ceyhan pipeline between Iraq and Türkiye can carry only about 0.4 mbpd, well below its 1.5 mbpd intended capacity, because of the delayed repairs needed for the segment within Iraq.”

The End of the 'Efficiency-Only' Era

On supply chain resilience, Gatti said the world is undergoing a severe test that began with the COVID-19 pandemic and has extended to regional conflicts, events that have exposed the fragility of excessive reliance on geographically concentrated production networks.

She stressed that the key lesson from these crises is that “efficiency alone is no longer enough,” as governments and companies increasingly need to build buffers, diversify sources, increase inventories of critical goods, and develop more flexible logistics systems.

She also pointed to the current analytical frameworks and extensive research to support countries in this transition, referring to the World Development Report 2020, which examined the challenges facing developing countries in the era of global value chains.

She also noted an upcoming report titled “Resources to Resilience: Economic Diversification for Oil and Gas Exporters in MENAAP,” which will provide a roadmap for exporters in the Middle East, North Africa, and Asia-Pacific on how to diversify their economic capabilities to navigate disruptions in maritime corridors and sudden shocks.