Tourism in MENA: A multi-sector swell

MENA Outlook Quarterly
MENA tourism

Florence Eid-Oakden, Ph.D, Chief Economist
Charlene Rahall, Robin Mills, Roa Ibrahim, Mingqiao Zhao, Abeer Khalid & Mengran Li, Analysts

Our quarterly regional theme analyses trends and opportunities in the economically-important tourism sector in MENA. It also highlights cross-country comparisons, global importance and challenges facing the sector.

  • Tourism is a vital source of growth in MENA. The contributions to GDP and employment from the sector are higher than in all other global regions.
  • Despite being badly hit by the economic and political uncertainty associated with the 2010 Arab Spring revolutions and the other turmoil in the region that has followed, there are some signs of recovery.
  • Forecasts from the United Nations World Tourism Organisation point to MENA receiving 195 million international tourists by 2030, up from 90 million in 2017.
  • Such prospects have prompted a number of countries in the region to launch aggressive tourism campaigns.
  • As well as its holy places, Saudi Arabia believes tourists will be attracted by new tourism mega projects, the loosening of visa restrictions and social liberalisation. By 2030, tourist arrivals are forecast to rise to 30 million from 18 million last year, which itself was a jump from 10 million in 2010.
  • The UAE’s diversification efforts are paying off with projections of continued growth in tourist arrivals. The UAE is undertaking mega projects such as Dubai’s Expo 2020, building theme parks and museums and developing more hotels to attract a greater number of tourists and generate alternative revenue streams.
  • Medical tourism presents an untapped opportunity for many in the GCC. Cognisant of this, some GCC governments have been offering support for the industry to attract international patients seeking better and/or cheaper care than they can get at home.
  • In the wellness tourism sub-sector, thermal/mineral springs are an underdeveloped segment that offer significant potential in the region, attracting those seeking physical and/or mental respite.

Growth in MENA is gradually recovering from last year’s downturn. Real GDP is expected to pick up in 2018 to 3.2% from 2.2% in 2017, but regional conflicts and ongoing fiscal adjustments mean it has remained subdued compared with an average of 3.7% over 2010-2016.

  • Oil-exporting economies are benefiting from the rise in oil prices, allowing some governments to boost spending and taking some pressure off financial markets.
  • Egypt’s economy is expected to be the top regional performer in 2018. At the other end of the spectrum, Yemen, which is entangled in a bloody civil war, is expected to contract for the fifth consecutive year. Among other major economies, Saudi Arabia’s economy is expected to return to growth this year, and the expansion could well surpass expectations given it will increase production, following the OPEC+ meeting which formally decided to expand supply.
  • However, political developments have taken centre stage in some countries, threatening to derail the region’s economic recovery. Read our country pages for colour.

Our Sino-MENA Monitor sheds light on the quiet partnership between China and Tunisia. China is increasingly looking to Tunisia to serve as an ideal intermediary between North Africa and Europe, while Tunisia hopes a boost in Chinese investment can ease its economic difficulties.

The MENA Outlook publication presents Arabia Monitor’s insights on global markets, outlines and analyses regional future trends and defining themes, and then focuses on individual country macroeconomic views. Each publication is laid out in a concise bullet point format and features a Special Feature interview with regional leaders including central bank governors, ministers and executives.

To access the full report, please click here.