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The economic importance of the Middle East?

Summary:
Or lack thereof?: Even beyond Iran, the region scarcely registers on multinationals’ profit-and-loss statements. The Middle East and Africa accounted for 2.4% of listed American firms’ revenues in 2019, according to Morgan Stanley, a bank. For European and Japanese companies it was 4.9% and 1.8%, respectively. Middle Easterners still buy comparatively few of the world’s cars (2.3m out of 86m sold globally in 2018). Peddlers of luxury goods like Prada, an Italian fashion house, and L’Oréal, a French beauty giant, book 3% of sales in the Middle East (not counting sheikhs’ shopping trips to Milan or Paris). The overall regional footprint of Western finance appears equally slight. At the end of 2018 big American banks had .5bn-worth of credit and trading activity in the region, equivalent

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Or lack thereof?:

Even beyond Iran, the region scarcely registers on multinationals’ profit-and-loss statements. The Middle East and Africa accounted for 2.4% of listed American firms’ revenues in 2019, according to Morgan Stanley, a bank. For European and Japanese companies it was 4.9% and 1.8%, respectively. Middle Easterners still buy comparatively few of the world’s cars (2.3m out of 86m sold globally in 2018). Peddlers of luxury goods like Prada, an Italian fashion house, and L’Oréal, a French beauty giant, book 3% of sales in the Middle East (not counting sheikhs’ shopping trips to Milan or Paris).

The overall regional footprint of Western finance appears equally slight. At the end of 2018 big American banks had $18.5bn-worth of credit and trading activity in the region, equivalent to 0.2% of their assets. This includes JPMorgan Chase’s $5.3bn business in Saudi Arabia and Citigroup’s $9.6bn exposure to the United Arab Emirates (UAE). European banks have, if anything, been retreating. BNP Paribas of France sold its Egyptian business seven years ago and earned a footling €121m ($143m) in the Middle East in 2018. HSBC reports a substantial $58.5bn in Middle Eastern assets, though that is still a rounding error in the British lender’s $2.7trn balance-sheet.

Here is more from The Economist, noting that energy does play a larger role in other economic sectors.  If there is any part of the world that could use more multinational activity…

The post The economic importance of the Middle East? appeared first on Marginal REVOLUTION.

Tyler Cowen
Tyler Cowen is an American economist, academic, and writer. He occupies the Holbert C. Harris Chair of economics as a professor at George Mason University and is co-author, with Alex Tabarrok, of the popular economics blog Marginal Revolution. Cowen and Tabarrok have also ventured into online education by starting Marginal Revolution University. He currently writes the "Economic Scene" column for the New York Times, and he also writes for such publications as The New Republic, the Wall Street Journal, Forbes, Newsweek, and the Wilson Quarterly.

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