Published March 4th 2024
By Shadi Swais
In a display of global leadership and economic strength, the United Arab Emirates (UAE) recently hosted the Thirteenth Ministerial Conference of the World Trade Organization (WTO), attracting praise from ministers worldwide. The UAE's strategic positioning as a global economic hub has been further underscored by a groundbreaking $35 billion investment deal with Egypt to transform the Ras Al-Hekma region into a significant economic and tourism hub.
Ministers from across the globe convened in Abu Dhabi from February 26 to March 1, 2024, to discuss the future of the multilateral trading system at the WTO Ministerial Conference. The UAE's hosting of this prestigious event received commendations for fostering constructive dialogue and enhancing international cooperation for a sustainable economic future. Notably, WTO Director-General Ngozi Okonjo-Iweala commended the UAE's successful organization of the conference, highlighting the country's growing influence in reshaping the global trade landscape.
Egypt, building on the momentum generated by the WTO Conference, announced the securing of the first $5 billion tranche in the Ras Al-Hekma property development deal with the UAE. This monumental $35 billion agreement aims to develop the coastal peninsula of Ras Al-Hekma, further solidifying Egypt's economic ties with the UAE. The infusion of funds and the establishment of strategic partnerships are set to transform the region and contribute significantly to Egypt's economic growth.
In tandem with the Ras Al-Hekma project, Egypt is exploring similar development plans for Ras Gamila, a vacant seaside area near Sharm el-Sheikh. A committee has been formed to craft a strategic vision for the region, indicating a commitment to maximizing the potential of Egypt's natural resources and boosting economic prospects.
Economic analysts anticipate positive effects on the Egyptian pound (EGP) following the UAE investment. Short-term projections suggest the EGP could trade at 45 EGP per USD by year-end on the black market, surpassing initial forecasts. The influx of foreign direct investment is expected to bolster the Egyptian economy, providing much-needed relief amid economic challenges, foreign debts, and a significant budget deficit.
The Ras Al-Hekma mega deal is poised to have a remarkable impact on various facets of the Egyptian economy. Expected to attract $150 billion in foreign direct investment (FDI), the project aims to establish a new-generation city with diverse facilities. The agreement with the UAE involves a payment of $35 billion, with Egypt retaining 35% of the project's profits.
Goldman Sachs predicts that the foreign currency provided by this deal will bridge Egypt's financial gap for the next four years. Morgan Stanley estimates coverage of the financial gap for three years and 9% of the country's GDP. Following the deal, the EGP's exchange rates and gold prices experienced positive movements, indicating market confidence in Egypt's economic prospects.
The UAE's leadership role in hosting the WTO Conference and its substantial investment in Egypt exemplifies a commitment to global economic collaboration and development. As Egypt embarks on transformative projects, the positive impacts on its economy, currency valuation, and overall prosperity become increasingly evident. The UAE's example serves as a beacon for advancing economies worldwide, showcasing the potential of strategic partnerships and visionary leadership in fostering sustainable economic growth.
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