- UAE businesses remain cautiously optimistic for the year ahead.
Reveals a Grant Thornton report launched at an event with Economist insight from the Dubai Economic Development Department and HSBC Middle East.
New research from Grant Thornton reveals that going into 2016, UAE businesses remain cautiously optimistic for the year ahead despite the spotlight being heavily focused on the oil & gas sector which has seen a rapid decline in prices, impacting other sectors and economies in the GCC which are highly dependent.
According to the research globally, business optimism heading into 2016 stands at net 36% - only slightly down from Q3 2015 and just above the 35% recorded a year ago. For the first time since the financial crisis, it is the EU which provides the bedrock of stability. Net 38% of EU businesses are optimistic about their economy over the next 12 months, exactly the same as in Q3 and Q1. Meanwhile the US has seen optimism fall from 74% to 50% in Q4, the biggest fall of any of the 36 countries surveyed. 2016 also looks much brighter for businesses in Asia Pacific and Latin America as both report big quarterly increases in optimism.
Hisham Farouk, CEO at Grant Thornton, said:
“The resilience in the UAE business community is remarkable when you consider the potential flashpoints. Despite the recent oil price woes, businesses are remaining cautious optimistic as a result of increased efforts by the government in the UAE to diversify the economy. Investment in R&D and innovation is on the increase, the government budget saw only a slight decline from last year and emerging markets such as India and China, continue to present opportunities for UAE businesses”.
“The UAE has one of the most stable economies in the world and has witnessed remarkable growth in recent years, which continues to position it high in terms of global competitiveness. The International Monetary Fund (IMF) has projected growth at 2.6 per cent this year as a result of slower public spending amongst the Gulf countries, reduced sentiment in neighbouring countries such as Saudi Arabia which is expected to spend 13 per cent less year on year when it comes to public spending, and various macroeconomic global issues.”
“The UAE economy has remained somewhat resilient in comparison to other markets, as a result of diversification, government initiatives and the ease of doing business. Whilst the country’s economy has remained fairly impervious, tightening of liquidity across the GCC, the impact of low energy prices and a deceleration in financial growth, credit and increased regulation will remain a challenge for businesses this year.”
The report was launched at an event attended by senior professionals from the Emirates, with presentations from Razan Nasser, Senior Economist at HSBC Middle East who opened the event by sharing the economic outlook for the Middle East. Dr. Raed Safadi, Executive Director of the Research and Policy Sector at Dubai’s Department for Economic Development concluded the Economic Outlook event by presenting the outlook for Dubai which illustrated how the Emirate is making significant leaps in the region to capitalize on its world-class infrastructure and its logistics, trade and transportation assets and bilateral relationships with economies such as India and China, to further drive the diversification of its economy where, today, it derives 70% of its GDP from the non-oil sector.
The event concluded with Hisham stating:
“The global economy continues to change and evolve, with shifting landscapes in major economies creating new challenges but also new opportunities. Those businesses with an instinct for growth will be best placed to spot these emerging pockets of opportunity, build new trade links, and make the most of the brighter outlook being reported for 2016.”
To read the report, click here.