By Soren Billing
Senior vice president admits US is in recession, says Gulf will also feel impact.
The US in now in a recession and the Gulf is not immune to a global downturn, a senior executive at GE, one of the world’s largest companies by market capitalisation, said on Tuesday.
“I think we are in a recession in the States, absolutely,” said Charlene Begley, chief executive of GE’s Enterprise Solutions business, which boasts annual revenue of $5 billion and has 17,000 employees. Begley is also a senior vice president at GE.
“I think the next 18 months will be very tough in the US and western Europe and as a result we’re tightening up on discretionary spending and being very careful about our operating costs.”
But Begley remained upbeat about the company’s prospects in the Gulf.
“Overall I’m still very bullish about the growth in this region,” she said.
“Do I think it will be affected by a recession in the US? Yes I do, mostly because of the liquidity crisis.
“But I don’t think the long term growth potential is any less exciting, it just may be slowed down a bit.”
Within GE Enterprise Solutions, the security business is expected to be especially hard hit since demand is driven by new construction work.
US media last week quoted Begley as saying her unit has imposed a hiring freeze and is limiting travel to customer visits and closing deals.
“What we’re doing is we’re looking very carefully at any new hires,” she told Arabian Business.
She is also cutting discretionary costs to avoid having to take “more severe action”.
GE chairman Jeffrey Immelt told the Wall Street Journal on Friday that costs and employment would be lower at the company in 2009, without giving numbers.
GE posted an unexpected drop in first quarter profits in April this year and sold $3 billion in preferred stock to Warren Buffett’s Berkshire Hathaway earlier this month.