BNY Mellon foresees growth in Middle East

The Middle East division of BNY Mellon, a US investment bank with more than $1.82 trillion in assets under management, is predicted to grow by a “healthy single digit or more” over the next five years as regional economies continue to grow quickly despite global challenges.

“It is a region that receives a significant amount of management’s attention and time at BNY Mellon — and management attention and time does translate into capital allocation and resource commitment to the region,” Hani Kablawi, chairman of BNY Mellon’s international operations, told a local news outlet.

“The Middle East remains important to us today, if not more important than it was last year.”

Regional economies, especially the six-member GCC economic bloc, made a significant recovery from the pandemic-caused recession in 2017. Despite rising inflation and increasing global macroeconomic challenges, the economy has accelerated this year as regional sovereigns increase expenditure in response to high oil prices.

BNY Mellon forecasts its Middle East business growth to be “above average,” driven mostly by the bank’s “organic business,” as it reported a 6% increase in third-quarter revenue to $4.28 billion. Though it is not a current focus, the bank is also open to chances for inorganic development.

The International Monetary Fund predicts that Saudi Arabia’s economy will expand at its strongest rate in ten years and could rank among the fastest-growing in the world this year. The kingdom’s economy expanded 12.2% in the second quarter, faster than expected and at its strongest rate in more than ten years thanks to increased oil prices.

The IMF predicts that Saudi Arabia’s GDP will grow by 7.6% this year, following 3.2% growth in 2021, while the Saudi investment bank Jadwa Investment predicts output will rise by 8.7% this year and the OECD anticipates growth of 9.9%. According to projections from the UAE Central Bank, the second-largest economy in the Arab world is expected to grow by 5.4% this year.

Additionally supporting their capital markets and defying the bear market trend in global stock markets, the United Arab Emirates and Saudi Arabia have seen a constant stream of initial public offerings. The largest Arab exchange, Tadawul in Saudi Arabia, has increased around 7% since the start of the year, while benchmark indices in Abu Dhabi and Dubai have increased by almost 19% and 5%, respectively.

Foreign investment into Saudi Arabia and the UAE is increasing as a result of efforts to diversify the economy, which have created new investment opportunities and increased investor confidence in the fundamentals of both economies’ growth.