Pakistan’s Battle for Gulf Investments: Economic Crises and India’s Growing Influence

1. Pakistan’s economic situation is teetering on the brink as the country is facing a perilous financial crisis, scrambling to secure external financing to meet growing obligations. The country has received only temporary relief from a US$7 billion staff-level agreement with the International Monetary Fund.

2. Pakistan’s financing need for the 2023–2024 fiscal year is estimated at US$25 billion. To bridge this gap, Pakistan has turned to its traditional allies — Saudi Arabia, the United Arab Emirates (UAE) and China — to seek additional financial support, debt restructuring and foreign direct investment (FDI). Pakistan aims to re-profile US$12 billion in bilateral debt, with US$3 billion owed to the UAE, US$4 billion to China and US$5 billion to Saudi Arabia. The goal is to extend the repayment of these loans over the next three to five years, providing Pakistan with a more stable financial foundation.

3. Pakistan has opened the door to Gulf countries, especially Saudi Arabia and the UAE, through the Special Investment Facilitation Council — a platform to attract FDI in key sectors such as agriculture, mining, energy and infrastructure. FDI increased to US$1.9 billion in 2023–2024 fiscal year compared to US$1.6 billion in 2022–23 fiscal year, a 17 per cent increase. Although China remains the largest contributor, there has been an increase in FDI from Saudi Arabia and UAE, rising from US$1 million to US$10 million over the 2022–2023 fiscal year.

4. Saudi Arabia and the UAE have shown interest in agriculture and mining, sectors where significant investment opportunities exist. These investments align with their broader strategies — Saudi Arabia’s Vision 2030 and the UAE’s post-oil economy strategy — to diversify their economy away from oil dependency and expand their global influence. By investing in Pakistan, both nations seek to strengthen their diplomatic ties and economic presence in South Asia, tap into new markets and expand their geopolitical reach.

UAE Sees 33% Surge in Greenfield FDI Capital Inflows in 2023 and takes second place globally in new FDI projects at 1,323

1. The UAE ranked second globally in greenfield FDI projects in 2023, with 1,323 project announcements, showing a 33% rise compared to 2022, according to the UNCTAD 2024 World Investment Report.

2. FDI inflows into the UAE reached $30.688 billion in 2023, marking a 35% year-on-year increase, while FDI outflows decreased to $22.328 billion.

3. Key sectors driving the growth of greenfield investments included business services, software, and IT, contributing to a 7.5% rise in jobs and a 37% increase in capital inflows, according to UAE Ministry of Investment officials.

McKinsey : Supply chains: Still vulnerable

1. Supply chain disruptions keep on coming. From missile attacks on commercial shipping in the Red Sea to automotive production delays following floods in Europe, global supply chains continue to experience instability. Meanwhile, trade tensions are choking the movement of semiconductor products, manufacturing equipment, and critical materials.

2. The latest McKinsey Global Supply Chain Leader Survey suggests that problems like these remain the norm, not the exception, with nine in ten respondents saying they have encountered supply chain challenges in 2024 (see sidebar, “About the research”). More worryingly, there are signs that, when it comes to supply chain resilience, companies are taking their foot off the gas. The survey results identify considerable gaps in the ability of organizations to identify and mitigate supply chain risks, with few new initiatives aimed at addressing those weaknesses.

3. The biggest gap could be the one at the top of the organization. Few surveyed supply chain executives believe that their boards have an in-depth understanding of supply chain risk. Only a quarter have formal processes in place to discuss supply chain issues at board level. All this could leave companies dangerously exposed to future disruptions.

Sino-EU cooperation

1. The European Union's competitiveness report released by Mario Draghi, a former European Central Bank chief.

2. The report, in a way, is an acknowledgement of China's phenomenal transformation over the past decade toward a more sustainable and innovation-driven economy. The sheer fact that China is mentioned many times in the report and that the EU now sees a huge gap not just with the United States but also with China is telling, especially because many Europeans still see China as a country providing cheap labor — although that is no longer true, according to the Draghi report.

3. A decade ago, when China announced its strategic shift, from investment-driven quantitative economic growth to innovation-led high-quality development, not many people took it seriously. Today, China has become a global leader in research and development, renewable energy including solar and wind energy, and electric vehicles (EVs).

4. China is catching up fast with the industrialized world, partly by learning from the EU and other developed economies, but more importantly through massive investments in R&D. Who would have thought just a decade ago that China's robot density would rank fifth in the world, trailing South Korea, Singapore, Germany and Japan but ahead of the US and the average EU member state?