Executives in the region are largely upbeat in their outlook for the coming 12 months, buoyed by higher and more stable oil prices, although political volatility remained a cause of concern for many, said the Gulf CEO Survey carried out by Oxford Business Group (OBG).
As part of its survey on the economy, the global research and consultancy firm asked almost 900 C-suite executives from across the Gulf’s industries a wide-ranging series of questions on a face-to-face basis aimed at gauging business sentiment.
OBG also will present The Report: Dubai 2019 in the first quarter of 2019, its latest analysis of the emirate’s economic activity and investment opportunities. Nasdaq Dubai was a key contributor to the report, helping to produce in-depth analysis of the emirate’s capital markets.
According to OBG’s findings, 70 per cent of executives said their expectations for local business conditions in the approaching year were either positive or very positive, with only 16 per cent describing them as negative or very negative.
Responding to a separate question, a similar proportion (69 per cent) of interviewees told OBG they thought it likely or very likely that their company would make a signiﬁcant capital investment within the same timeframe, despite facing higher borrowing costs on the back of rising US Federal Reserve interest rates.
Business leaders were also positive about the tax environment of the market in which they operate, with 87 per cent describing it as competitive or very competitive on a global scale. In addition, most of those interviewed (70 per cent) felt that the level of transparency for conducting business in their market was high or very high, relative to the region.
From those surveyed, the vast majority of respondents said that less than 40 per cent of their business was driven by government spending, while just 15 per cent told OBG that more than 80 per cent of their work came from the public coffers, in a sign that reforms aimed at boosting the role of the private sector were beginning to deliver results.
Understandably, regional political volatility remained a key cause of concern for many business leaders, with over 70 per cent citing it as the external event most likely to impact their market's economy in the short to medium term beyond the movements in commodity prices, well ahead of China demand growth and multiple Fed rate hikes.
When business leaders were asked about the skills they felt to be in highest demand in the workplace, however, results were more varied. From those interviewed, 23 per cent cited leadership as the skill they believed to be in greatest need, followed by engineering (18 per cent), research and development (14 per cent), and computer tech (10 per cent).
Commenting on the results in his blog, Oliver Cornock, OBG’s managing editor for the Middle East, said that higher and more stable oil prices had undoubtedly helped to lift the Gulf countries over the past year, while also providing governments with some breathing space, several of whom had found themselves under pressure to implement difficult reforms with urgency on the back of falling hydrocarbon receipts.
“It is essential, though, that the often-painful reforms to policies such as subsidies are not reversed,” he added. “That is the fear of some analysts; not least because they impact the nationals who can least afford it almost by default. The introduction of a goods and services value-added tax (VAT) has been partially rolled out in the region, and by and large passed off uneventfully. However, this is an ongoing process, and even the more diverse economies have much to do in terms of varying their revenue generation.”
Cornock noted that the positive sentiment expressed by CEOs in the survey broadly mirrored the outlook of the IMF, which has forecast real GDP growth in 2019 for all but one of the markets in the region.
“The key for governments looking to increase the level of private sector engagement in their economies will be to continue chipping away at the reform and diversification process without knocking this positive confidence,” he said.
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