Happy Tuesday everyone!

Today’s top stories are:

• U.S. Eyes Lebanon’s Central Bank 🇱🇧: Washington is influencing the selection of Lebanon’s next central bank governor to curb corruption and Hezbollah-linked financing.

• UAE Boosts Egypt’s Tourism 🇦🇪🇪🇬: Abu Dhabi Fund for Development is investing $120M in a five-star Sofitel hotel near the Giza Pyramids, strengthening UAE-Egypt economic ties.

• Arab GDP Reaches $3.6T 📈: The region’s economy grew 1.8% in 2024, driven by Saudi Arabia, UAE, and Egypt, with further expansion expected in 2025.

Let’s dive in!

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US Seeks to Influence Lebanon’s Next Central Bank Chief Amid: Reuters

📰 What is it about?

• The U.S. is engaging with Lebanon’s government over the selection of the country's next central bank governor, aiming to curb corruption and illicit financing linked to Hezbollah, according to sources, quoted by Reuters, familiar with the discussions.

• Washington is vetting candidates for the position, marking an unusually direct involvement in Lebanon’s financial and political affairs.

• This comes as Lebanon continues to grapple with a five-year financial crisis that has devastated its economy and banking system.

• Meetings between U.S. officials and potential candidates have taken place in Washington and at the U.S. embassy in Lebanon to assess their stance on anti-money laundering measures and countering Hezbollah's financial networks.

💡 Why it matters?

• The move underscores the U.S.'s ongoing efforts to weaken Hezbollah, whose influence in Lebanon’s government has declined following last year’s conflict with Israel.

• A credible central bank governor is seen as critical for restoring financial stability, unlocking IMF aid, and securing Western and Arab financial support for Lebanon's reconstruction.

• The new governor will play a major role in economic reforms, which remain a prerequisite for IMF-backed recovery programs and foreign investment.

• Lebanon’s financial system was placed on a global financial watchdog's "grey list" in 2023 due to concerns about money laundering and terrorism financing, making regulatory reforms essential.

🔜 What’s next?

• The U.S. is consulting with Saudi Arabia on the selection process, indicating broader regional coordination on Lebanon’s economic future.

• Candidates being considered include former minister Camille Abousleiman, IMF’s Jihad Azour, investment executives Firas Abi-Nassif, Philippe Jabre, and Karim Souaid.

• The incoming governor will replace interim chief Wassim Mansouri, who took over in 2023 after Riad Salameh's controversial 30-year tenure ended in sanctions and corruption allegations.

• Lebanon’s economic recovery hinges on reforms, but political divisions and resistance to change could hinder progress on financial restructuring and anti-corruption efforts.

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Markets

UAE to Fund Luxury Hotel Near Giza Pyramids to Boost Egypt’s Tourism

📰 What is it about?

• The UAE is financing a five-star hotel near the Giza Pyramids to support Egypt’s growing tourism sector, according to state-run WAM news agency.

• The Abu Dhabi Fund for Development (ADFD) will provide AED 440 million ($120 million) for the project, which will be a 302-room Sofitel Legend Pyramids Giza hotel.

• ADFD will cover 84% of the project’s capital through the Abu Dhabi Tourism Investment Company, with additional investments from Abu Dhabi National Hotels, Overseas Tourism Investment Company, Misr Hotels Company, and the Egyptian General Company for Tourism & Hotels.

• French hospitality giant Accor Group will manage the hotel, though a completion date has not yet been announced.

💡 Why it matters?

• Egypt’s tourism revenues surged to $15 billion in 2024, more than double the $7 billion recorded in 2014, signaling a strong recovery in the sector.

• The project is part of the UAE’s expanding investments in Egypt, which includes ADQ’s $35 billion new city project on the Mediterranean coast and Emaar Properties’ increased investment to $25 billion over the next three years.

• Egypt’s economy has faced foreign exchange shortages, higher import costs due to the Ukraine war, and declining Suez Canal revenues, making foreign investment crucial.

🔜 What’s next?

• Egypt’s economic growth is projected to accelerate, reaching 4% in the 2024-2025 fiscal year and 5% in 2025-2026, according to the European Bank for Reconstruction and Development.

• The UAE’s continued investments could further strengthen Egypt’s tourism industry, attract more high-spending visitors, and boost job creation in the hospitality sector.

• More details on the hotel’s construction timeline and opening date are expected to emerge as the project progresses.

Arab Region’s GDP Hits $3.6 Trillion in 2024 Amid Growth in Key Economies

What is happening?

• The Arab region’s gross domestic product (GDP) grew by 1.8% in 2024, reaching $3.6 trillion, despite ongoing regional challenges.

• Growth was primarily driven by Saudi Arabia, the UAE, Egypt, Iraq, and Algeria, which together accounted for over 72% of the region’s GDP, according to a report from the Arab Investment and Export Credit Guarantee Corporation (Dhaman).

• The report aligns with Moody’s projections, which forecast a continued economic upturn in the Middle East and North Africa (MENA) region in 2025.

Why it matters:

• Moody’s predicts 2.9% growth for the MENA region in 2025, up from 2.1% in 2024, attributing this to increased oil production and major investment projects.

• The Arab economy’s growth in 2025 is expected to be 1.4%, driven by 14 expanding economies, including nine oil-producing nations that contribute 78% of the region’s GDP.

• Saudi Arabia is expected to lead the region’s economic boost, fueled by Vision 2030 investments and sovereign wealth fund spending.

• Hydrocarbon exporters will play a crucial role, as easing OPEC+ oil production cuts will drive growth among Saudi Arabia, the UAE, Iraq, Kuwait, and Oman.

What’s next?

• The partial reversal of oil production cuts in 2025 is expected to raise real GDP growth for hydrocarbon-exporting nations to 3.5%, up from 1.9% in 2024.

• Cautious optimism surrounds the region’s economic stability, with hopes for a reduction in regional conflicts and an increase in revenues from oil, gas, and exports.

• The continued economic upturn will depend on sustained investment projects, geopolitical stability, and the performance of non-oil sectors across the region.

🔍In other news…

1. Dubai-listed district cooling company Tabreed is aiming to expand through acquisitions and organic growth in the UAE and global markets.

2. Dubai Aerospace Enterprise (DAE), the Middle East’s largest aviation leasing and engineering company, has acquired 17 aircraft for $1 billion from multiple sellers.

3. Germany pledges 300M euros in aid for Syrians at EU conference.

4. Residential rents grew 20 percent in 2024, while sales prices climbed by 11 percent in Abu Dhabi: report.

5. Abu Dhabi imposes up to AED10,000 fine for property fencing that distorts public appearance.

6. UAE ranks among 17 countries in dividend payout records.

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