Gulf states punched above their weight on the global stage in 2023, from driving dealmaking worldwide to shaping the debate and direction of the energy transition at COP28. Fueled by sovereign wealth funds armed with fresh cash generated by booming oil prices in 2022, regional economic diversification drives kicked into high gear this year, delivering everything from green hydrogen mega projects to Saudi Arabia’s billion-dollar soccer spending spree.
Yet hype and headlines have since been overshadowed by the eruption of the Israel-Hamas war, which poses significant risks for the Gulf Cooperation Council's (GCC) outlook and complicates economic overhauls. At a minimum, the specter of conflict now looms over the Gulf, distracting from efforts spearheaded by Saudi Arabia to preside over a so-called new Middle East, one where economic development and stability wash away conflict and confrontation.
Ultimately, the conflict has delivered a reality check for Gulf ambitions and hurt broader regional economic integration while clouding the outlook for foreign direct investment, tourism and trade. For now, the potential for enduring instability cannot be ignored, but Riyadh and other regional capitals hope to shrug off this setback in 2024. What came as an eventful year in the region culminated with COP28 in Dubai, which saw the UAE preside over a historic global agreement to transition away from fossil fuels.
Meanwhile, plenty of tailwinds persist in one of the world's most active markets for dealmaking, while global financial players remain hungry for Gulf money. Amid tight funding conditions elsewhere, the world of finance has eagerly deepened regional ties in 2023. That came as H1 of 2023 saw 318 deals across the Middle East and North Africa that amounted to $43.8 billion, with GCC countries accounting for nearly 98% of value, found EY. Crucially, Gulf IPO activity has maintained momentum amid ongoing efforts to enhance capital markets and attract foreign investment. GCC countries recorded 29 IPOs totaling $5.8 billion in proceeds through Q3, reports EY. That marked a 6% reduction in volume and a 61% decline in proceeds year-on-year, but still made the Gulf a bright spot in a depressed global IPO market.
