Positivity about future for business in Middle East
Despite the negative effect of the Arab Spring on business in the short-term, economists are optimistic about the long-term prospects of business in the region
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Six months on from the start of the Arab Spring, businesses around the world say they are positive about the future for business in the Middle East, according to research released today by Grant Thornton.
The latest research from Grant Thornton’s International Business Report (IBR) reveals that as the region continues to experience major political change, globally, more than a fifth (22%) of privately owned companies say that the unrest has had a negative impact on their business. This figure is highest in North America where a quarter (26%) of businesses report a negative impact.
However, when asked if the situation is affecting their plans to do business in the region, only 10% globally said they are now less likely to do business there. Established economies are most positive about the outlook for the Middle East, with only 6 per cent of North American and G7 companies saying they are less likely to do business in the region.
Ed Nusbaum, CEO of Grant Thornton International, said: “Businesses over the first half of this year have had a number of issues to deal with as a result of the Arab Spring. Fuel prices have increased, pushing up operations and production costs. There is also the direct effect on order books that businesses will have felt as supply routes between these countries are disrupted, with governments in the region focusing on political issues rather than trade. Turkey, for example, has been hit hard, with 36% of business saying they have felt a negative impact – undoubtedly due to the Middle East being a key export region for them.
“Despite these immediate impacts, however, the long-term outlook still holds much promise. The overwhelming majority of businesses do not see the current unrest as a future hindrance to growing or investing in the Middle East and North Africa. As the region continues to open up to outside investment, it will become central to the long-term growth prospects of the global economy and should be seen by businesses as an area of real opportunity. It is certainly a region which Grant Thornton will be monitoring closely over the next couple of years,” added Nusbaum.
Hisham Farouk, Managing Partner, Grant Thornton UAE, said: “Recent unrest has had a negative effect on some businesses with strong links to the region, but it has by no means been universal. In fact, it’s clear that despite the upheaval, businesses across the globe view the region as one with real opportunities for the future.”