Like several other economies around the world, the GCC countries have been rendered vulnerable by the COVID-19 crisis, stated research firm Frost & Sullivan. Wholesale & retail trade, transportation & storage and financial & insurance sectors, which accounted for nearly 50% of Dubai’s GDP in 2018, have all been affected.
However, according to Frost & Sullivan, some sectors in the GCC have made gains and exciting opportunities are emerging, while careful risk mitigation strategies are helping others chart a new course for the future.
Sustained infrastructure development and growing segments like e-commerce will moderate the impact of COVID-19 on GCC’s transport & logistics sector. More immediately, the sector will face challenges in the form of supply chain disruption, capacity constraints and cost pressures. However, the crisis will motivate the building of shock-resilient supply chains in food and healthcare logistics, while creating greater impetus for supply chain digitisation. Warehousing space will expand with the establishment of more free zones, even as warehouses gain greater operational efficiencies through the use of robotics, artificial intelligence (AI) and augmented reality (AR) tools.
Travel restrictions have severely affected the food & beverages (F&B) sector. The Hotels, Restaurants & Cafes (HORECA) segment, which comprises 30% of the GCC’s economy, has been particularly hard hit because roughly 20% of its revenues is related to tourism. Meanwhile, quick service restaurants (QSRs) and fast food eateries have realigned operations to serve only delivery and takeaway orders.
F&B retail is in flux with disrupted supply chains, consumers bulk-buying long-shelf-life products and hoarding/panic buying throwing traditional demand projections into disarray, Frost & Sullivan opines. The nascent e-commerce industry has received a fillip with new growth opportunities for primary packaging materials manufacture.
Despite pockets of growth in network implementation and management services, the IT services sector is likely to decline as a whole. The pandemic will, however, catalyse unprecedented growth in digital services and technologies that enable digitalisation.
Meanwhile, COVID-19 is poised to trigger double-digit growth in telemedicine and virtual care solutions, highlighting the need for higher local production of essential drugs and underpin the growing importance of online pharmacies.
The duration and severity of COVID-19’s impact on economies and sectors will undoubtedly vary. However, companies would do well to set in motion a “look ahead, anticipate and adjust” roadmap, Frost & Sullivan suggests. Over the near term, companies should explore supply chain diversification and leverage new opportunities arising from changing customer demands. Over the long-term, product and service portfolio diversification will be critical to ensuring greater resilience. Externally, strengthening brand equity and shifting sales channels online will be strategically important. Internally, adopting technologies that support workplace and operational continuity will enable companies to hit the ground running following the COVID-19 crisis.