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Monday, February 18, 2019 8:45 GMT

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Confidence Down among ME Chief Executives


After a significant uptick in optimism last year, Middle East CEOs are more cautious about growth in the region, according to respondents in a PwC survey.

Only 28% of the Middle East CEOs were ‘very confident’ on revenue growth over the next 12 months compared to 33% last year, and 35% of global CEOs, said the PwC’s 22nd CEO Survey, launched at the World Economic Forum Annual Meeting in Davos.

"When we look at medium-term growth, 40% of the CEOs are ‘very confident’ about their revenue prospects over the next three years, a record low in this year's survey," it said.

Middle East CEOs are also more pessimistic about the short-term global economic outlook for 2019 than their global peers (28% vs 42%).

Focus on efficiency

Middle East CEOs, in line with their global peers, are prioritizing operational efficiencies to remain fit for growth. 68% of regional CEOs put “operational efficiencies” at the top of their list of planned activities to drive profitability in the next 12 months compared with 77% globally.

Most strikingly, the proportion of business leaders who expect their headcount to fall is more than double the global figure (43% vs 19%).

Stephen Anderson, clients and markets leader at PwC Middle East, said: “Some of the crude cost-cutting in the region in 2015-2017 had cut into muscle, and with improving economic conditions last year, some pressure came off. We are now seeing a far more strategic, fundamental look at efficiency within businesses, where they are looking to leverage technology to sustain a lower cost base.”

Looking closer to home for growth

CEOs are looking closer to home for growth. Saudi Arabia is firmly on the minds of CEOs based in other parts of the region with the Vision 2030 transformation continuing at pace. Egypt also featured more prominently this year as 15% of CEOs cited it as the most important for growth, coming second only to Saudi Arabia (28%) and followed by India (13%) and Iraq (10%) in the rankings.

Digital disruption

Regional CEOs are grappling with rapidly changing consumer behavior as the digital revolution takes hold at speed. Middle East CEOs see changing consumer behaviors (79%) and the speed of technological change (75%) as the most significant threats to their organization.

On the impact of AI, 91% of Middle East CEOs believe that artificial intelligence (AI) will significantly change how they do business in the next five years, in line with the global results. Although 43% have plans to start introducing AI initiatives in their organization in the next three years, only 23% have already introduced AI into their business, half the proportion globally.

Two things are holding regional organizations back according to CEOs, data and skills. Only 13% (compared to 41% amongst global CEOs) believe the quality of their company’s data is adequate for assessing the customers’ preferences and needs. And 61% of regional CEOs cited the lack of analytical talent as the primary reason they do not receive adequate information.

Hani Ashkar, Middle East senior partner, commented: "The skills needed to give meaning to data and technology are in high demand. In order to reap the benefits of an investment in digital, companies need to invest and upskill their people. This is important because digital upskilling goes beyond just embedding the technology, it will allow companies to deliver quality and drive growth, securing their future."

Anderson concluded: “Successful Middle East CEOs will be those that can drive efficiencies to get fit for the new lower growth realities of the region and, free the required investment to, transform their business to get ahead of ever increasingly fast-paced disruption. They must do all this while inspiring their people to go on the digital upskilling journey vital to fuel the transformation. Who’d want to be a CEO?”


published:04/02/2019 06:56 GMT

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