In the Global Risks report, experts painted a grim picture of the economic outlook for the next two years. More than 1,300 officials from governments, corporations, and major international institutions participated in the survey for this report, which was published by the World Economic Forum. So, what does this mean? If experts labeled last year as the “year of the trade war”, then this year is set to be one of multifaceted economic turmoil, fueled by escalating conflicts between major global powers. What began as a limited dispute over trade tariffs has evolved into a fierce economic and financial war, along with the emergence of new major alliances that differ completely from those of the past.
With the European-American tensions over Greenland, the alliance between the two sides is now under threat, and the economic and financial repercussions are expected to be significant. Furthermore, there are secondary trade and financial disputes between countries that are negatively affecting the global economy. These tensions increase the risks faced by Gulf sovereign wealth funds invested in the USA and its allies. As a result, countries with large sovereign wealth funds have begun withdrawing investments from high-risk markets and redirecting them to safer regions.
Meanwhile, other nations, including several Gulf states with limited economic and financial infrastructure, are focusing on developing domestic productive projects and forging partnerships with neighboring countries. Their goal is to create an integrated market capable of withstanding major global shifts and avoiding significant risks.
These countries have spent several years adjusting their strategies by diversifying their production sectors and reducing reliance on the centralized economies favored by the United States. This allows Washington to acquire more funds from various sectors to ease its debt burden, which has reached unprecedented levels of almost $37 trillion.
The grim outlook highlighted by experts in the report underscores the need to change the methods by which sovereign wealth funds are invested, particularly in high-risk regions that are constantly vulnerable to setbacks. The 2008 global financial crisis and the COVID-19 pandemic serve as lessons of the financial and economic difficulties the world has faced, the effects of which continue to be felt today.
The discussion regarding the need to be cautious about expanding sovereign investments abroad and the importance of repatriating a significant portion of them, as well as building modern infrastructure and major refining projects, establishing diversified industries, and focusing on food security all point to the necessity of adopting a new, low-risk strategy that can be managed without losses. The world today is facing a fierce trade and economic war that threatens major entities.
Therefore, Kuwait needs several industrial, service, agricultural, and other projects to help minimize risks and stimulate domestic consumer spending in order to ensure greater social stability. Such a strategy would position the country as a regional economic force, benefiting from the industrial diversification of neighboring states and achieving long-awaited integration.
Today, the Middle East is on the brink of a radical change. While the region remains volatile, it is also a central hub in the global economy. With its strategic location, unique cultural and social characteristics, and vast wealth, Kuwait is capable of playing a significant role both locally and regionally. That is why we said yesterday, and reiterate today, that investing sovereign wealth funds domestically and forming partnerships with culturally and socially homogeneous nations has become a necessity for all countries that have long invested abroad.
These countries have suffered greatly from this policy and are now seeking new, safer avenues. Stop focusing on imposing fees and raising fuel prices, and instead, turn your attention to the bigger issues. Support the people so they can, in turn, support you.
