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Think Research and Advisory, a Saudi-based firm providing independent research and strategic advisory on the MENA region to international decision makers and entities, is pleased to announce the publication of a new review titled ‘Six Trends Shaping the MENA Region in 2023: Public Sentiment Polling Data Drawn from 12 MENA Countries Highlights Regional Attitudes to Inflation, Energy Volatility and Physical Security’. The review provides critical insight into the challenges and opportunities for the region and into the data collected on MENA residents’ food, fuel, electricity and gas price inflation expectations for 2023. It reveals that public sentiment across the region is characterised by growing apprehension around the future affordability of fuel, electricity and gas.

Based on a survey of 1,600 adults across 12 Middle Eastern and North African countries, the review provides an insightful overview of people’s expectations for food, electricity and fuel price increases in 2023. At the macro-level, the review addresses how another year of oil price volatility – driven by global economic uncertainty, the Russian-Ukrainian conflict and supply chain disruptions – will impact the region across four key areas: energy, macroeconomics, geopolitics and regional security and stability, leading to increased regional cooperation.

Last year was a period of significant volatility in the energy markets as oil prices increased from $86 per barrel at the beginning of the year to $100 in August 2022¹. Think’s survey found that adults in the MENA region expect energy prices to continue increasing in 2023, with people in North Africa and the Levant region forecasting their monthly fuel expenses to rise by 36% and 35% by December, respectively. This outlook was mirrored in oil-rich GCC countries, where residents believe their fuel spend will rise by 31% in 2023.

A closer look at the six GCC states surveyed – Saudi Arabia, United Arab Emirates, Qatar, Oman, Kuwait and Bahrain – reveals notable differences at the national level which appear to be linked to the countries’ hydrocarbon positions and the status of their economic reform initiatives. These factors may impact residents’ expectations about their governments’ ability to limit the costs for consumers. For instance, people in Oman, a country with a smaller energy reserve base that has lagged behind its neighbours in diversifying its economy, expect their annual fuel spending to increase by 107%. Meanwhile, residents of Oman’s wealthier neighbours, the United Arab Emirates and Saudi Arabia, forecast just 15% and 23% rises in their fuel spending.

Similarly, gas and electricity costs are expected to rise across the region in 2023. In the GCC, residents believe that they will be paying 23% more for electricity and gas this year than in 2022, while people in North Africa and the Levant expect the price to jump between 39% and 41%. While people across the region expect price rises, the expected increase in costs varies significantly by country. For example, Bahraini residents anticipate a 42% increase, whereas people in Saudi Arabia only forecast a 19% rise.

The continued volatility in the energy markets during 2023 is expected to have a mixed impact on the MENA region as macroeconomic, environmental, geopolitical and energy issues will affect oil-poor and GCC countries differently. The key takeaways are outlined below:

• Energy: 2023 will be a pivotal year for the energy sector as the continued disruption in the oil and gas markets will drive North American and European countries to accelerate their transition away from hydrocarbons and reduce their dependency on oil and gas markets. As a result, the global energy system will begin to bifurcate between hydrocarbon-based countries and energy economies based on renewable and low-carbon energy sources.

Not with standing, energy-rich countries will continue to reap the benefits of an oil windfall and increase their hydrocarbon production as they believe it will remain central to the future global energy mix. The significant fiscal surplus generated from considerable oil and gas revenues will provide policymakers in energy-rich countries with a runway to drive domestic investments and accelerate the diversification of their economies.

• Macroeconomics: The prolonged energy crisis and global financial conditions are expected to result in a deceleration of the region’s overall economic activity, but the impact will vary between energy- poor and GCC countries. Rising commodity prices have weakened purchasing power in the region’s emerging economies given the dependence on energy and food imports, but they have also enabled energy-rich states in MENA to generate large fiscal This will allow Gulf countries to maintain momentum around their pro-business and economic reforms and further invest into the non- hydrocarbon energy sector.
• Geopolitics: As the Ukrainian war continues and geopolitical tensions between the US, China and Russia escalate, GCC countries are expected to take a proactive role in global affairs to protect their interests, by acting as interlocutors between parties, ensuring the region becomes an increasingly pivotal player in the shifting global geopolitical landscape. The US, China and Russia will continue to play an important, distinct role in the region as the US will remain a primary security partner, but its focus will move towards leveraging technology to build the region’s capacity as it reduces its physical military presence in MENA. Meanwhile, China is expected to prioritise strengthening economic ties with the region, and Russia will continue to pursue bilateral ties with GCC countries given the significance of oil to their respective
• Regional security and stability: Climate change and increasing water-scarcity, particularly in fragile states such as Yemen, are likely to exacerbate existing conflicts and lead to the emergence of water If not addressed, these issues could create further instability in the region and threaten the security of the Red Sea corridor, a vital global trade route.

As the challenges for MENA multiply, regional cooperation is expected to advance positively, particularly in the areas of energy, technology, climate economics and social stability. This trend will likely focus on securing social stability and economic growth by implementing regional programmes such as the Middle East Green Initiative, a regional effort to promote cross-border cooperation to mitigate the impact of climate change in MENA.

Neil Quilliam, Director of Energy Research at Think Research and Advisory, said: “While there are six main trends shaping MENA in 2023, their impact on the region will be mixed as environmental, geopolitical, macroeconomic and energy issues will impact energy-poor and GCC countries differently. This, coupled with the ongoing bifurcation of the global energy system, which will lower long-term demand for hydrocarbons, will

lead regional powers to use their fiscal surplus generated by the oil windfall to further their economic modernisation efforts and promote more regional cooperation to maintain security and stability in the region.

“At the national level, our research has revealed that MENA residents are increasingly concerned about price inflation and their ability to afford basic goods such as fuel, electricity and gas, reinforcing the argument for further regional cooperation to safeguard MENA’s future growth.”