Saudi Arabia will lead Gulf funds’ inward focus shift

Significance

This echoed the strategy of the sovereign wealth funds of Gulf Cooperation Council (GCC) states after the 2008 global financial crisis, but there are several key differences: GCC balance sheets and revenues are now weaker, capital inflows lower and the economic damage much greater.

Impacts

• A more strategic focus will raise the political profile of investments, at home and abroad.
• Local investments may include off-balance sheet government funding of mega-projects, consolidation of key industries and job creation.
• Lacking new capital, GCC sovereigns are likely to invest less in Arab and African countries, instead signing off on more IMF support.
• Co-investments in sectors of common interest will boost government-to-government links with states such as China, Russia, India and Turkey.