- Global survey finds UAE business leaders optimistic on growth prospects ranking higher than the US
The latest research from the Grant Thornton International Business Report (IBR) finds businesses in the UAE in a highly optimistic temperament about growth prospects for the year ahead, leading global confidence levels for hiring and profitability moving into 2014.
Of the 45 economies surveyed, only businesses in the Philippines (96%) are more confident in the local economic outlook. Net 84% of UAE business leaders express optimism for the year ahead which meant the UAE ranked higher than the US, Singapore and India.
This confidence extends into local business expectations for revenues, profits and hiring over the next 12 months. The UAE led all countries surveyed in Q3 for planned hiring over the next 12 months (net 66%) – ahead of Georgia (60%) and Turkey (56%), with the global average at 25% – and for profitability expectations (68%), well above the global average (38%). The UAE (84%) trails only India (86%) in terms of revenue expectations over the next 12 months.
Hisham Farouk, Managing Partner of Grant Thornton UAE commented: "The strength of business growth prospects reflects robust economic data. The UAE is expected to expand by around 4.4% forecast in both 2013 and 2014 and construction across the Gulf is booming with oil prices still well above US$100 per barrel. Clearly the openness of the UAE economy means is it susceptible to fluctuations in global trade patterns, but recent uncertainty in the US and some emerging economies does not seem to have dampened business confidence.
"Importantly, non-oil exports continue to grow as the economy diversifies, becoming a world-class hub for trade, transport and tourism. The emirate has invested heavily in recent years to boost trade, building manufacturing industries and economic zones. Port infrastructure and other transport links within the region, and to Asia and Africa are also improving, aswell as further building trading opportunities for businesses in the UAE. These investments are vital to increasing the long-term growth potential of the economy."
The economic picture globally is also improving. UK business optimism shot up from net 34% in Q2 this year to 76% in Q3, the highest figure ever recorded for the UK in 22 years of IBR research. Business optimism in the US remains high too, at 52% in Q3 although marginally down from 55% in Q2.
By comparison, businesses in emerging economies are markedly less confident. Brazilian optimism fell from 43% to 31% in the last quarter, a record low, while across Latin America as a whole optimism fell from 48% to 38% - its lowest since 2009. Elsewhere, Russia slid from 28% to 19%; Turkey (6%) dropped to its lowest since the financial crisis; and South Africa hit an all-time low of 18%. Again though China seems to be one step ahead of the other major emerging nations: having fallen to record low of 4% in Q2, business optimism picked back up to 31% in Q3.
“The results highlight a subtle but significant shift in global economic growth patterns, with some rebalancing towards developed markets like the UK and US. Together these two economies account for a quarter of global output so any recovery should have positive repercussions around the world. Businesses around the world need to be alive to this shift and the growth opportunities it offers.
“Clearly businesses should not write off emerging economies in their search for growth, but the results highlight the reversal of fortunes in developed countries. The BRICs and other frontier markets need to tackle issues such as rising inflation and substandard infrastructure if they are to maintain the rapid growth we’ve seen in recent years and avoid the so-called 'middle income trap' and the rise in optimism for the UAE further enforces believe that the UAE is becoming the business hub for the Middle East.”