Economic rebound and government action drives CEO confidence in UAE

The confidence of UAE-based chief executive officers in the economy has returned to pre-pandemic levels, according to the latest CEO Outlook study from KPMG.

It’s been a rough period – and a test of leadership – for CEOs of any business since the World Health Organization declared Covid-19 a global pandemic 18 months ago. KPMG has been tracking the steps and sentiment of CEOs across this period, with its latest study now suggesting that the rebound process is entering the next phase.

The firm canvassed the views of over 1,300 chief executive officers globally (plus UAE-based CEOs) on topics such as growth, confidence in the economy, innovation and more, with the headline finding demonstrating the “resilient and vibrant nature” of the local economy, said Nader Haffar, Chairman and CEO of KPMG Lower Gulf.

Today, 92% of CEOs are confident about the country’s growth prospects – the highest level in 18 months and 10% higher than the global average. Similarly, 88% of local business leaders are optimistic about their company’s growth.

Much of the renewed confidence stems from the economy’s rebound. Having faced its deepest recession since the 1930s, the UAE economy is forecast to grow by 2.1 per cent this year, driven by pandemic-mitigation measures, and expand by 4.2 per cent in 2022 (in part driven by Expo 2020), according to the central bank’s second-quarter review.

The government has been another key factor driving the UAE’s rebound, said Haffar. “The government’s response to the healthcare and economic crisis was strong, among others due to imposing an early lockdown, promoting the vaccination program alongside spreading awareness, and government stimulus measures announced last year.”

At the same time, the UAE’s government managed to “turn a potential crisis into an opportunity through smart policy, intelligent technology and encouraging the private sector with a raft of enabling measures,” he added. Meanwhile, recent progressive reforms, including new long-term visa schemes, have bolstered the attractiveness of the UAE’s economy for doing business, international trade and investments.

“Thanks to this stable framework, CEOs are emerging stronger and more confident about the economy and their own organizations’ prospects for the future,” said Haffar.

Driving growth and transformation?

Asked how they expect to drive growth over the next three years, a surprisingly large share of CEOs (68%) pointed at inorganic strategies. Of this group, 36% said they will turn to mergers & acquisitions, 20% to strategic alliances with third parties (20%) and 12% to joint ventures.

Facing the need to keep apace with a rapidly changing environment, CEOs told KPMG they are planning to become more open to partnerships and industry collaboration – with such alliances seen as key pillars for innovating at speed while remaining operationally agile.

Growth and transition will however not come easy. The CEOs surveyed have identified a range of risks and long term Covid-19 pandemic effects, including continued disruptions to the supply chain, work-related pressure on employees, technology risks including cyberattacks, and last but not least, the need to put ESG centre stage in strategy and operations.

On the latter, the survey found that 84% of UAE CEOs are notably seeing greater demands from stakeholders – such as investors, regulators and customers – for increased reporting and transparency on ESG issues (compared with 58% globally). As a result, more than half of CEOs plan to invest more than 10% of their revenues in becoming more sustainable.

Siddharth Behal, Partner and Head of Governance, Risk and Compliance at KPMG Lower Gulf, said: “As attention to environmental, social and governance factors increases among private and public investors in the UAE, CEOs are encouraging projects that promote a sustainable future and are in line with where the country is headed in terms of sustainable development.”

To navigate a successful path, Marketa Simkova, Partner and Head of People and Change at KPMG Lower Gulf, urged leaders to take a “forward-thinking approach towards transforming the impact of Covid-19 into an opportunity.” This will pave the way for “an environment that drives higher employee engagement and more productive, long-lasting connections with their teams.”

Meanwhile, Farhan Syed, Partner and Head of Advisory at KPMG Lower Gulf (among others), said the pandemic has proven that digital now is inextricably linked with strategy. “CEOs should take advantage of the new reality and digital enablement to overcome the talent gaps they are facing by hiring beyond borders. After all, it’s not technology that limits us today; it is our imagination.”

CEOs in the UAE asked by KPMG to comment on the findings included: Bernd van Linder, CEO of Commercial Bank of Dubai; Dhaher bin Dhaher Al Mheiri, CEO of ADGM Registration Authority; Tarek Fathey, Chief Executive Officer of SEHA - Abu Dhabi Healthcare Company; Rola Abu Manneh, CEO of Standard Chartered Bank in the UAE; and Arif Amiri, CEO of Dubai International Financial Centre Authority; and Colm McLoughlin, CEO of Dubai Duty Free.