, political, and Business Leaders gathered in dubai this week for the world government summit. The event brought together officials, policymakers, thought leaders, and private sector trail blazers to explore the future of government in the face of a changing world. On sunday, Tracy Alloway spoke with the secretarygeneral of the oecd, angel gurria, and began by asking for his take on the recent market volatility. angel the experts say it was a correction, but i think it is a warning. I think it is very important to take heed and say, listen this is the kind of thing that happens when the stock market or any other indicator takes off without a linkage to the real economy underground. This is the kind of thing that happens. Therefore, it is a warning against complacency, against patting yourself too much on the back. I think that we should acknowledge that there is a recovery going on. That there is a synchronized recovery, that is good. But we are running out of Monetary Policy room and as well as on the fiscal policy. Therefore, we have to focus on the structural changes. We have to focus on education, on innovation, on competition, on regulations, on the labor markets, the product markets, on education, the Financial System we have to focus on those traditional things that take so long to produce results, and which therefore politicians are a little adverse, because they do not give you a lot of votes in the short term. Sometimes they take votes away. Tracy right, i want to press you on this. Because we have had years of unconventional Monetary Policy. Lots of people have been saying that we need fiscal policy, fiscal stimulus, we need structural reform. And we have not got it. Why not . Angel we did get some stimulus, some fiscal stimulus, but we are running out of the room because we all want to reduce deficits. And in the terms of i think central bankers are heroes. We owe them a lot. We probably would still be in the doldrums of the crisis without the Central Banks role. But that has a limit. And we are reaching the limit. The fed is going back to more normal, which is good. The u. K. Is announcing they will go back to more normal. Hopefully the European Union will stay a little bit longer on. In the case of japan, also hopefully a little longer also. The whole point is, we are running out of room there. Fiscal had a role. They did it. Even at the expense of bigger deficits, they did it. But that again has run out of steam. The question now is structural, structural, structural. And unfortunately, we have measured, we have observed that there is a fatigue for reform, just at the time when we need it more. Tracy right. On this fiscal deficit point, are we then constrained, does it end up constraining Economic Growth when we have deficits where they are right now . We just saw moodys warning on the u. S. Aaa rating for , for instance . Angel listen, the u. S. Does its own rating apart from everybody else. Tracy they are special. Angel i always say that perhaps other than the u. S. , maybe germany and japan, we all belong to the avis club. You remember when you got to the avis counter and wanted to rent a car, and that people have a sign that says we are number two so we try harder. Ok, everybody has to try harder these days. The markets are very unforgiving. Given what has happened in the last few years with the crisis, even more unforgiving than they were before. So you cannot slip. And you cannot show weakness. And you cannot show lack of resolve. This is very crucial to give confidence Going Forward. Tracy ok, lets talk about the broad economy, because the imf upgraded its Global Outlook in january. Do you share that optimism . Angel i think the numbers show that we are better off. Our own numbers since last november showed that we were going in that direction, so yes, there is a better economic performance, but it is paradoxical. We are showing 2016, 3. 1. Then perhaps 3. 6, 3. 7, 3. 8. Then it tapers off in 2019, so it does not just continue unabated for the future. So the question of investment. Is it investment recovering at the speed that we need . Trade is still about half the growth that we would require. The confidence level was hit. The legacies of the crisis are low growth, high unemployment, growing inequalities, and the destruction of trust. And the question of trust we still have not fixed. And this is giving, among other things, the results that we see in the number of elections, or even worse when people move away from elections, they do not even go and vote. This is why we lost brexit. Tracy right. How do, forgive the term, but how do global elites such as yourself handle that rising populism . Angel the question is to deliver results and to recover those that were left behind. We were so focused on the recovery. I think it was appropriate. But now it is a different time. Now it is a time of reckoning. You see, we left so many millions out of this recovery. Now, let us go back. It has to be productivity and growth inclusiveness. The link between the two of them is what will make the future strategies work or not. The lack of the link between productivity and inclusiveness is what has so many people angry. And the proverbial backlash against globalization. Tracy right. Yousef up next, air arabia flies high as it beats out earnings. The ceo laid out the carriers ambition for 2018. Our exclusive interview is next. This is bloomberg. Yousef welcome back to the best of Bloomberg Markets middle east. Air arabia this week announced that they had beat on fullyear net income, and the ceo believes that the carrier can fly even higher in 2018, thanks to oil prices and growing demand for travel. Speaking exclusively to bloomberg, he told me about his predictions for growth. Adel we have budgeted for 7 of growth. And that growth is easily achievable in terms of passenger numbers. Obviously, one extremely difficult to predict exactly the bottom line for the airline in 2018, because we are still in month two. But overall, there is no reason for us to believe that it will not be as good if not better than 2017. Yousef what are some of the bright spots that you are looking forward to in 2018 when it comes to markets . Is it size of scope and scale like saudi arabia, for example . Adel i think that the saudi distribution is extremely low, and we offer it at 12 airports , and we have seen the whole economy is changing. Obviously again, i go back to the improvement in the Bottom Line Oil price, increasing that market size. We are seeing some of that coming back. More importantly, we have grown our business. The good spots would be places like morocco. It is growing for us from strength to strength. And we are putting more capacity on those lines. Egypt is another one that we have grown 100 yearoveryear , and we may grow more this year. Particularly, the tourism coming back. The world cup will bring some business, probably for a month or two in that market as well, given that they have qualified. Equally, morocco has qualified for the world cup as well. That will sort of bring additional unexpected business that will do good. Yousef how comfortable are you with where you are over the next three to four years, given where oil prices are . Adel i think one, obviously if one had a crystal ball, we probably wouldnt be having this conference or this interview. I would have been more focused on oil and prediction. But, you know, we hedge oil for an operational reason. So far, for the last five years, we have been doing it and it has helped us. 2017, again, had a good impact over all on our result. I think what we look at, we continue to hedge at 50 . Around that figure. At the figure that we feel that either way that oil goes, we will end up with a good positive result for the company. So therefore, oil hedging is not necessarily done for the profitability of making money out of oil, it is done to make sure that we buy security and insurance of the operation. Having said that, i think oil, the good oil price that we are seeing, it will fuel the economy in a positive manner, and it will gain us an overall improvement of business. Yousef hsbc put out a Research Note a few days ago, and they were making the argument that there is some consolidation plays in the market. And we are not talking about intraregional, but we are talking about cross region. And air arabia was one of the names put on the note. Any discussions ongoing or ideas as to whether m as is a way to push forward . Adel you know, being a publicly listed company, obviously we have the publics money and we need to make sure that there is always, whether there is an opportunity of investment, and if it means good for the company and for the overall business, we should consider it. We are honestly always looking, there is always discussion going on with multiple people, but 99 of those do not really work out , because they do not necessarily meet our needs or the synergy that benefits our business. At the present, i can be honest that nothing is going on. But if something comes up that we feel it matches our dna, then we would be more than happy to look at it. Yousef the story around sentiment, and you told me that the oil price was supporting Consumer Confidence and people have changed, they want to travel more. There is the other side of that coin, which is the reality of higher cost of living, v. A. T. , that is dampening sentiment as well. Are you seeing any evidence of that, and what are you doing to offset some of that as the governments roll out more taxes and reduce the amount of money theyre spending . Adel with the technology around us, we see that everybody wants to travel now. We find that the one time traveler is becoming the two to three times a year traveler. We are finding the younger generation, their thoughts and minds are very different to taking holidays than to staying home. They do not want to take one trip a year, they want to be always on the road. We have opportunities. We see quite a lot of short breaks. We carried half a Million People last year. And i think we will probably end up carrying another halfmillion more this year. Yousef another company that beat with its latest result was saudi telecom, the firm also announced a 1. 8 billion agreement recently for the right to broadcast soccer matches in the kingdom in one of the biggest such deals in the middle east. I spoke to the ceo and began by asking what sort of growth he thinks the company can capture in the next few quarters. Khalid 2017 brought aggressive for our cost efficiency and optimization. As you may know, our fourthquarter profit increased by 27 year on year and for the full year itself, we had a net profit of almost 14 . That was really a very intense costefficiency program that we carried out through 2017. But also, 2017 saw a decrease in revenue, which is a reflection of the challenging Economic Conditions and environment in the kingdom. And Regulatory Environment in the kingdom. Yousef saudi arabia has been at the forefront of reinventing innovation, if that is the right way to put it, because you have been lifting a lot of rules, removing a lot of red tape, i am thinking along the lines of the removal of the voip, the voice over ip ban. You have a lot more competition now. What can you do to overcome that more in the remainder of 2018, the fresh competition and intensity of it that is chipping away at your top line . Khalid true, lifting the ban on vip definitely impacted our revenue, especially the International Calls revenue. We have two options. Either continue as is and live with the decline, but i think as a telecom industry, we have two things to do. One, is to start capitalizing more on data. Data consumption in the kingdom is one of the highest in the world per capita, therefore it can be a good source of revenue to continue with investment. The other is by diversifying our revenue through investing in an adjacent things. I think that is what stc has been doing over the last year or so. Yousef you look at the balance sheet, you have strong cash positions, perhaps an opportunity to use of some of that and go acquire one or two new innovations. Khalid yes, actually, on one front, in 2017, we announced a 500 Million Technology venture fund, which will make investments in emerging technologies virtual reality, ai, Digital Health things of that sort. Yousef right. So are we going to see more of that . Khalid we will, definitely. You know, we have actually announced a new strategy which will see us actually investing more in adjacent media, Digital Financial services, ip services, the different platforms we have been investing in the last few years, like cloud and iot. And i think that you mentioned that we have already announced a major investment in the Digital Rights for the saudi football league. Yousef what about the fate of turk telecom . Is there a chance that stc buys them out . Khalid i will not go into the details of that, but i think we have been discussing this with the banks on the debt, and the discussion is ongoing on that front. Yousef why is it taking such a long time to resolve the default on the loan that happened a year ago . Khalid well, it is a complex deal. We have so many entities involved, especially from the bank side. It does take time to really get and discuss things with all of them. We are putting a proposal on the. E will continue t we are putting a proposal on the table. Yousef up next, saudi arabia presses ahead with its plan to become a tourist hotspot. We speak with the company hoping to benefit from growth in the red sea area. Our interview with the dp world ceo is next. This is bloomberg. Yousef welcome back to the best of Bloomberg Markets middle east. The dubaibased port operator dp world told bloomberg this week that it is ready for Major Investments to take advantage of, wait for it, the Red Sea Market and growth expectations in saudi arabia. Chairman and ceo Sultan Ahmed Bin Sulayem spoke with Tracy Alloway at the world government summit. Ahmed in our case, dp world, we are the largest port operator in saudi arabia in key locations that have strategic and supplychain opportunities for us. And indias importance is the at the growth in india is probably one of the best in the world. India could be the fastestgrowing market in the world today. There are many initiatives by Prime Minister modi and making india, manufacturing investment market, and so on. That is good news for us because we are set to take advantage of that. That is why we signed with the National Indian infrastructure fund, 3 billion, which will be used to basically remove inefficiencies in the supply chain. Indias problem is not the availability of ports, but taking the cargo to the end customer and vice versa. Tracy now, one other area of opportunity for you is saudi arabia. Have plans to transform the jeddah port into a red sea hub,. Has the Saudi Ports Authority approved the plan yet . Ahmed yes, we have been discussing it for many months actually, and this is part of the saudi plan for jeddah. Jeddah today is one of the main ports in saudi arabia, especially at the red sea, it is the most important route between europe and the far east. The potential is big, but unfortunately the infrastructure in jeddah port itself was not developed. Now we are getting to develop major investment deployed for jeddah port to take advantage of the Red Sea Market, but also most importantly, the growth expected in saudi arabia. Saudi arabia has vision 2030, which is a huge opportunity for us. Their budget for this year was the largest in their history. A lot of investment in infrastructure that can help jeddah port to really develop and expand. Tracy and the Port Authority has approved your plan . Ahmed the plan has been approved, and we are in the final stages of actually talking with the ministry on a day to start our expansion. Tracy lets segue to russia, because you have also made an offer for a stake in far eastern shipping company. Having you heard back from russias antitrust regulator on that one . Ahmed we are in discussion in russia for a while about many opportunities. One of them is this. This issue of of course, of course, government approval for Infrastructure Investment is something of a procedure that is followed. We could actually start, but we are waiting until we get a green light that this eventually will be removed. Potential in russia will be transportation, not just by boat, but the interesting thing russia. It is a unique situation that there will be a lot of cargo that goes by train. That will be what we want to do, linking of course. We have not been to the russian market in a big way, we have been to a small port in vladivostok, which we basically exited some years ago. Tracy so we just discussed india, saudi arabia, and russia. How are you financing all of your expansion plans . Are you selling more bonds . Ahmed let me tell you, we have a very strong balance sheet, and we always keep enough funds to take advantage of opportunities that we see as potential. We do not want to be in a situation where we see opportunity and the market will be too expensive to finance it, so we are able to finance through our resources the expansions that we have. Yousef up next, u. S. Oil inventories expand again. Where does that leave opecs Production Cut . We discuss that next, this is bloomberg. Yousef welcome back to the best of Bloomberg Markets middle east. Fresh Industry Data this week shows yet another expansion of u. S. Crude and gasoline inventories, undermining efforts by opec and its allies to clear a global glut. However, the iea says the surplus has almost been cleared. I asked hootan yazhari, the head of mena and Frontier Markets at bank of