UAE, Saudi execs predict economic growth for year ahead

Majority of businesses plan to boost spending and employment, according to American Express survey
UAE, Saudi execs predict economic growth for year ahead
Saud Swar, VP commercial business & head of UAE, American-Express.
By Jeremy Lawrence
Tue 26 Jun 2018 04:02 PM

Middle East finance executives report substantial confidence in economic growth prospects for the year ahead, according to the 2018 Global Business and Spending Outlook survey by American Express Middle East.

More than 90 percent of respondents in the region anticipate modest to substantial economic expansion in their country, which measures above with the worldwide trend (85 percent).

This confidence is reflected in regional corporate spending plans: three quarters of the region’s finance executives (74 percent) plan to increase investment levels by six percent or more for the year ahead.

The findings place the UAE and Saudi in the top tier of global investors. The five countries with the highest investment growth in the world are: China (90 percent), Japan (87 percent), the UAE (84 percent), Saudi Arabia (83 percent) and Russia (80 percent).

Managing uncertainty

Finance executives appear to be taking the region’s increasingly rapid changes in their stride. Almost three quarters (73 percent) say that their investment plans are not impacted by domestic or economic risk.

“Financial leaders are less anxious about economic surprises and have a well-directed view on how to drive business growth,” said Saud Swar, vice president commercial business and head of UAE, American Express Middle East. “This prevailing optimism is tempered with smart strategies as we’re seeing spend directed to specific growth initiatives such as meeting customers’ evolving needs and emerging technologies that support the need to innovate.”

The fight for customers

Optimistic growth targets are tempered by a recognition that the fight to gain and retain customers is a key priority for regional businesses amid increasing competition. ‘Better meeting customer needs’ is the top business priority for 77 percent of respondents.

Companies also plan to deepen their investment in new product and service offerings (53 percent) and improve efficiency by streamlining processes and upgrading technologies (27 percent).

Other high-priority spending categories include transportation and logistics services, where 31 percent anticipate increased spending, along with travel and entertainment (30 percent).

Flexible labour set to rise

Almost all regional respondents (73 percent) expect at least a six percent increase in headcount. Sales, marketing and administration support staff are listed as the categories of employees that are most difficult to hire and retain (47 percent each).

To meet growing staffing needs, regional companies are likely to expand their use of temporary and part-time workers (59 percent) and to “on-shore” (43 percent), by moving positions from overseas to domestic locations, as opposed to outsourcing and offshoring (just 19 percent).

In a sign that Middle East companies are looking to attract and retain staff with measures other than salary raises, 63 percent of respondents plan to offer more flexible schedules and remote work opportunities, with the UAE showing the greatest potential to do so (72 percent).

An increase in training, relocation and geographic rotation programmes is also expected (65 percent), as well as overall improvement in physical workplaces.

Adopting new technologies

One fourth of respondents expect next-generation technologies to bring major disruption to their industry (25 percent) in the next five years.

Asked about the emerging technologies that “keep them up at night,” 66 percent feel most uneasy about robotics and automation (57 percent, worldwide). Artificial intelligence comes as the second source of concern at 41 percent (compared with 54 percent worldwide).

In response, Middle East executives are already making investments in robotics and automation (54 percent) and artificial intelligence (40 percent).

The American Express and Institutional Investor study findings are based on a survey of 870 CFOs and other senior finance executives at companies with annual revenues of over $500m from more than 21 countries worldwide.

For the first time in its 11-year history, the study includes respondents from the Middle East region.

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