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The Middle East is well placed to succeed China as a key manufacturing hub for low-cost goods, according to Ernst & Young's (E&Y) Rapid Growth Markets (RGMs) report
Technological advancements and the process of industrialisation in the Middle East would lead to metals, chemicals and other intermediate goods becoming an important part of the region's exports, as Qatar, UAE, Saudi Arabia and Egypt seek to position themselves in the global supply chain, E&Y highlighted.
The four countries have been included within a list of 25 key global RGMs in the report.
E&Y Middle East and North Africa (MENA) markets leader, Bassam Hage, said, "Exports from [Africa and] the Middle East are poised to grow by more than 12 per cent over the next decade.
"While China is still very competitive, rising wages are opening up opportunities in the Middle East. With a fast-growing labour force, the RGMs have the potential to become the next world assemblers, possibly replacing China, with China specialising in higher-value added goods.
"For this to happen there would need to be an investment in infrastructure and the continued fostering of entrepreneurship. RGMs need to look at China and learn from its fostering of small- and medium-sized companies," he added.
The MENA region is expected to grow at an average of four per cent this year, but growth in the region could be stronger, the report stated. Exports to Russia from the region would show significant growth of close to 14 per cent.
"The outlook for the MENA RGMs in the medium term is optimistic," Hage explained. "In addition to the rise in oil prices benefiting the region, non-oil activity is likely to remain strong especially with the steady labour force growth."