The UAE has the most optimistic business community in the world according to new research from Grant Thornton’s International Business Report (IBR). It also reveals that business leaders growth prospects have increased significantly across a range of growth indicators from this time last year.

Net 90% of UAE business leaders are optimistic about the outlook for the local economy, up from 88% this time last year, and the joint-highest in the 45-economy survey. The 2013 optimism average of 88% is up from 77% in 2012 and 69% in 2011.
And this confidence feeds through to business growth prospects: net 90% expect to increase revenues over the next 12 months, up from 82% this time last year; net 66% expect profits to rise, up from 60%; and net 76% are planning to hire workers compared with 56% in Q4-2012.

Hisham Farouk, Managing Partner of Grant Thornton UAE commented: "The message from UAE business leaders as we head into 2014 is overwhelmingly positive. Growth in 2013 was expected to be the fastest since the financial crisis at 4.3% and this is forecast to accelerate in 2014 with retail demand, tourism numbers, infrastructure investment, the stock market and the property sector all on the up, which has been significantly supported by the recent Expo 2020 win.

"The one potential flashpoint to watch out for is the labour market. More than three-quarters of business leaders are planning to hire staff but two in five cite a lack of skilled workers as a constraint on growth making it the key concern for growing businesses. Attracting the right workers from abroad, investing in educations and upskilling the existing labour force is needed to help businesses realise their growth ambitions."

Globally, the IBR also reveals that businesses in developed markets look set to drive business growth prospects in 2014, while peers in the BRIC economies face a more challenging period. Business optimism and growth indicators have increased substantially in the G7 over the past 12 months, with numbers in many emerging markets falling away, suggesting a rebalancing in the global economy.

This time last year, business optimism in the G7 economies stood at net -16% compared to 39% in the BRIC economies. However the picture heading into 2014 is markedly different with optimism in the G7 rising to 28%, driven by improvements in Japan, the UK and US, an increase of 44 percentage points. Optimism in the BRICs has fallen by 17 percentage points to 22% with Brazil hitting an all-time low (10%) and Russia its lowest level since 2009 (1%).

Ed Nusbaum, global CEO at Grant Thornton, said: “We’re braced for a momentum shift in the global business dynamic as we enter 2014. The BRICs have largely driven global growth since the financial crisis but the G7 economies are making a comeback – things even seem to be improving in the eurozone. The contrast from 12 months ago is stark – as business leaders plan for 2014, growth prospects in the G7 look more robust but uncertainty is growing in the BRICs and across Latin America."

This change in levels of business confidence feeds directly into business growth prospects. Revenue prospects across the G7 have risen by 18 percentage points over the past 12 months to 49%. In the BRICs though, expectations for revenue growth have fallen by 27 percentage points to 54% over the same period. Similarly, expectations for raising profits across the G7 were up 16 percentage points to 36% in Q4-2013 compared with 12 months previously while BRIC peers' expectations dropped 28 percentage points to 47% over the same period.

Expectations for employment, investment and salaries have also risen in the G7 since this time last year while those of BRIC peers have declined. Moreover, 12 months ago, 39% of business leaders in both the G7 and BRIC economies cited a lack of demand as a constraint on growth. This fell to 29% in Q4-2013 in the G7 but rose slightly to 40% in the BRICs.

Ed Nusbaum added: “The hope is that we are moving toward a more balanced global economy with fewer extremes. This should support business growth prospects; greater balance and less volatility means businesses can plan for the future and make decisions with greater certainty."