Middle East Megatrends

Transforming our region

Understanding the impact of global trends on the Middle East, and how governments and businesses can succeed in a very different world.

Distinguishing clearly between cyclical and structural trends can always be difficult. In the Middle East, where the oil cycle appears to determine the fate of so many sectors, it is especially hard. When the oil price is high, our region booms. When it is low, it is hard to do anything but react to the cut in investment. Yet our region, perhaps more than any other, is at the epicentre of the megatrends reshaping the world. Understanding how these structural trends will impact us – both separately and together – is vital to get a clear picture of how to tackle the challenges we face successfully and to uncover opportunities we may have never considered.

We see five megatrends impacting the world and our region over the next few decades. Demographic and social change has driven both prosperity and instability in much of the Middle East, as explosive population growth has boosted economies, strained resources and raised the spectre of youth unemployment. Part of that population growth stems from the inflow of expatriates, responding to the shift in global economic power which has placed the Middle East firmly in the middle of the world’s fastest-growing markets allowing Dubai, in particular, to turn itself into a global hub.

Urbanisation is transforming nations worldwide. Our region is one of the most highly urbanised in the world and, with new cities under construction, the level is still rising. It is a struggle to develop sufficient infrastructure to cope with both the population explosion and the pressures brought by climate change and resource scarcity – water consumption and energy diversification will become more pressing issues in coming years. Technological breakthroughs could be part of the answer, but the disruption that digitalisation is bringing to today’s organisations also requires new skills that are in short supply in the Middle East.

See how Megatrends are transforming our region

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Megatrends: Transforming our region infographics

Megatrends: Tranforming our regions

  • 28%
    Youth unemplyment in MENA is among the highest in the world at 28%3
  • 40%
    The region is young, with over 40% of people under 251
  • 51m
    The population of the GCC has doubled over the past 20 years to 51 million in 20152
  • $20bn
    In 2014 Investment flows into the GCC were $20bn, four times lower than in 2008 at their peak5
  • 30%
    Dubai International Airport is the world's largest traffic contributing 30% to Dubai GDP4
  • $4 trillion
    There are over $4 trillion worth of projects planned or under construction in the Middle East and North Africa6
  • 85%
    The GCC is one of the most highly urbanised regions in the world8
  • +1/3
    Water consumption is forecast to grow by a third by 20209
  • 90%
    Globally, 90% of the data that exists today was created in the last two years11
Sources:

1 - UN. 2 - World Bank. 3 - World Bank. 4 - IATA, Airport Council International. 5 - UNCTAD. 6 - MEED. 7 - IEA. 8 - UN. 9 - FAO. 10 - UN. 11 - PwC analysis based on Experian (2013). 12 - ITU

  • Demographic
    and social change
  • Shift in global economic power
  • Rapid urbanisation
  • Climate change
    and resource scarcity
  • Technological breakthroughs

Demographic and social change

The population of the GCC has doubled over the past 20 years to 51 million in 20151

In the UAE and Qatar just 1% of the private sector workforce is made up of nationals2

The MENA region has the highest gender labour market gaps3

By 2050, elderly nationals will make up 20% of the GCC population compared to only 2% today4

28% Youth unemployment in MENA is among the highest in the world at 28% 5

In Saudi Arabia, education expenditure now accounts for almost ¼ of total budget spending6

The UAE has an 8.3% higher obesity prevalence than the USA7

Expats make up 89% of the population in the UAE8

The region is young, with over 40% of people under 259

Sources:

1 - World Bank. 2 - Estimates from UN. 3 - World Bank. 4 - UN. 5 - World Bank. 6 - ADEC: Saudi National Statistics/OECD. 7 - World Bank. 8 - Estimates from National Statistics. 9 - UN

Shift in global economic power

Intra-GCC trade has grown from $8bn to $54bn in 13 years - that’s up 700%1

The Middle East is at the centre of fast growing trade flows2

Middle East middle classes are forecast to grow by 51% to 165.5m by 20203

Chinese companies in the Middle East have increased from 18 to 3,000 in less than 10 years4

Egypt attracted $18bn greenfield foreign direct investment in 20145

Dubai International Airport is the world’s largest for international passenger traffic contributing 30% to Dubai GDP6

3 billion people - 40% of the world’s population - are within a four hour flight of the UAE7

In 2014 investment flows into the GCC were $20bn, four times lower than in 2008 at their peak8

GCC sovereign wealth funds are among the world's biggest investors, spending US$24 billion a year9

Sources:

1 - IMF DOTS. 2 - EIU. 3 - OECD, European Environment Agency. 4 - EIU. 5 - FDI Intelligence. 6 - IATA, Airport Council International, CADA. 7 - PwC analysis based on World Bank and Dubai DTCM data. 8 - UNCTAD. 9 - SWF Institute

Rapid urbanisation

The GCC is one of the most highly urbanised regions in the world1

Doha has the fastest growing urban population in the GCC, up 220%2

Between 2000 and 2015 the urban population of Dubai increased by 1.6million people3

Cairo is the 10th largest city in the world, with 20 million people4

Egypt is building a $44 billion new city, east of Cairo5

There are over US$4tn worth of projects planned or under construction in the Middle East and North Africa6

In its Vision 2030, Saudi aims to have three 'top-100' cities by 2030.7

$16bn is the expected cost to develop the desert city of Masdar in the UAE8

By 2050, 90% of the GCC population will be urbanised - that's 20m more than today9

Sources:

1 - UN. 2 - UN, Citypopulation, Demographia, National Statistics. 3 - UN. 4 - Demographia World Urban Areas 2016. 5 - Daily News Egypt – 4.1.16. 6 - MEED. 7 - Saudi Arabia Vision 2030. 8 - The Future Build (2012). 9 - UN

Climate change and resource scarcity

GCC is among the world’s highest energy user per capita1

GCC countries have among the highest level of carbon emissions in the world2

Water consumption is forecast to grow by a third by 20203

Solar energy will account for almost two thirds of the Middle East’s energy mix by 20504

GCC relies on desalination for around 70% of its water5

Dubai has tripled its renewable energy target to 15% of the energy mix by 20306

The Middle East is home to 53% of the world’s desalination plants7

At the end of 2014 the Middle East had a 47% share of total proven oil reserves8

Middle East CEOs were among least concerned by the impact of climate change and resource scarcity9

Sources:

1 - UN. 2 World Bank. 3 - FAO. 4 - IEA. 5 - FAO. 6 - FAO. 7 - Clayton R.A Review of current knowledge, Desalination for Water Supply; Foundation for Water Research. 8 - BP Statistical Review of World Energy 2015. 9 - FAO

Technological breakthroughs

The MENA region is leapfrogging fixed internet and moving straight to mobile1

GCC smartphone penetration is among highest in the world reaching 78% in the UAE2

Twitter penetration in Saudi Arabia is one of the highest in the world with over 80% of nationals using twitter actively compared to just 11% in the US3

Around 85% of transactions that start online are closed off-line4

Online sales account for just 1% of retail sales across MENA5

R&D expenditure in Saudi Arabia and Abu Dhabi is still below 1% of GDP compared to the OECD average of 2.4%6

85% of CEO’s in the Middle East found technological change the most transformative of the global megatrends over the next five years7

90% of the data that exists today was created in the last two years8

UAE has the highest facebook penetration in the Middle East of 38% compared to only 12% in Oman9

Sources:

1 - Adjusted from World Bank. 2 - ITU. 3 - Mideastmedia.org. 4 - Interview with digital expert David Passiak 2016. 5 - Bqdoha.com. 6 - OECD, WIPO. 7 - PwC Global CEO Survey. 8 - PwC analysis based on Experian(2013), Facebook(2014), Google(2014), Forbes(2011) Note: Google revenue refers to 2013 (non-audited) revenue. 9 - Dubai School of Government’s Governance and Innovation programme.

We partner with our region’s Governments and businesses, to help solve the region’s most important problems and build trust in society. Together we can manage change and seize the opportunities.

Contact us

Hani Ashkar
Middle East Senior Partner
Tel: +971 4 304 3100
Email

Stephen Anderson
Clients and Markets Leader
Tel: +971 4 304 3100
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