Dubai will host the World Expo 2020 under the theme ‘Connecting Minds, Creating the Future’, with three sub themes – mobility, sustainability and opportunity, which represent the key drivers of global development. As with any industry, insurance is also set to reap the benefits that the event will bring. However, during difficult economic periods, such as the present time, how can companies benefit from having a good credit insurance policy?
The GCC region’s credit insurance market is poised for growth
By Massimo Falcioni, CEO of the GCC region at Euler Hermes
The credit insurance market of the GCC region reached record levels in 2012 in terms of earned premiums ($56 million), recording a growth rate of 38 per cent, when compared with the previous year. Euler Hermes expects the market to continue growing at the same rate in 2014.
Saudi Arabia and the UA E will drive the development of credit insurance together with Qatar, which will play a fundamental role because of its numerous economic development initiatives undertaken through exporting oil-based products all over the world.
The winning of the World Expo 2020 bid reflects positively on the UA E’s overall economy, but the most significant impact will be felt in the infrastructure, tourism, transport, technology, finance and property sectors. The tourism and travel industry will also see significant developments in the second half of the current decade, which will transform the country into a global tourist destination.
For the first time in the history of the event, visitors from abroad during the World Expo 2020 will constitute between 70 per cent to 75 per cent. Dubai will attract further investments in all sectors, including public trans- port services, restaurants, retail trade, transport and telecommunications, and a footfall of 25 million visitors, including 19 million from outside, throughout the six months of events and activities.
The three sub themes of the event – mobility, sustainability and opportunity – symbolise all that Dubai stands for. As individuals, professionals and corporate entities, our role is to strengthen the bond and help realise the goals and commitments of all those who are dreaming big about building the future.
Euler Hermes GCC will be supporting entrepreneurs, SMEs and large multinational corporations conducting their businesses wisely and expanding into new markets using world-leading trade credit insurance solutions. Expo 2020 will not only bring advancement in infrastructure development and further economic growth, but awareness about the expo is also bringing about an enormous sense of pride to the UAE as a nation and the GCC region in general. The country will gain international exposure and an opportunity to further its reach to the world.
Sustainability is one of the three core themes of Expo 2020, which is set to play a key part in the infrastructure of the Dubai event site. According to the planners, it will use at least 50 per cent of the energy that it will be generating, which will include photovoltaic technology, whereby electrical currents will be produced using solar energy. In line with Dubai’s expo transport policy, it will also be a zero emissions site. Although the UAE is currently one of the world’s biggest carbon emitters, an emphasis that will be placed on sustainability over the next seven years in the lead-up to the 2020 event, which will, no doubt, promote this fundamental issue within the UAE and help communicate the need for a sustain- able lifestyle on a global platform as well.
After the event, the site is to be recycled to be used as a research centre and university based around the study of the aims related to the expo, which includes sustainability. This development, in particular, could help many generations benefit in the quest for sustainability.
Perhaps the biggest person set to gain from Expo 2020 is ‘you’, the resident of Dubai. With a focus on sustainable development and transport infrastructure that will boost the local financial market, the long-term benefits of hosting the expo will, undoubtedly, be
felt by those living in the city.
The globalisation of commercial trade is growing at a faster rate every year, representing the true driving force behind world economic growth.
In fact, world trade increased by 4.1 per cent in real terms last year (GDP rose by 2.5 per cent) and is set to rise by 5.9 per cent in 2014 (with an expected GDP growth of +3.2 per cent). However, the global economic climate remains uncertain and risky.
Euler Hermes predicts that corporate insolvency index, which increased by eight per cent in 2013, will reach two per cent in 2014. The datum is affected by the weak financial situation in southern European economies, where the insolvency index rose by 33 per cent in 2013. Within this context, short-term commercial credit management is becoming an increasingly important strategic lever in business management, as credit insurance cover can provide protection against payment defaults.
The UAE: A global hub
The UAE stands out as a unique leader in world trade. However, a weakened Eurozone, the Arab Spring and international sanctions on Syria and Iran have led to a redistribution of trade dynamics.
The UAE was the first country to benefit from these events, acquiring the most out of trade, due to its political stability and openness towards inter- national trade with the neighbouring continents, Africa and Asia.
Euler Hermes expects that economic growth will continue to show a positive trend in 2014, which recorded a growth of +4 per cent last year, after a +4.4 per cent increase in 2012.
Moreover, GDP growth will also be supported not only by the production and exportation of oil, but also by the non-oil sectors, such as consumer electronics, chemicals, pharmaceutical, cosmetics, automotive, tourism, food and financial services. The excellent leadership and strong vision of the UAE’s rulers is one of the main reasons for its economic development and diversification from the traditional oil sector.
Moreover, the strategic geographic location in proximity with two rapidly developing continents, cheap labour and energy costs, low taxation and increased investments in infrastructure projects, such as airports, ports, industrial areas, make this country a natural hub for the economic growth of any business.