Majority of Saudi CEOs confident about KSA's future growth

06 July 2023 4 min. read

Most CEOs in Saudi Arabia feel positive about the country's economy in the next three years, despite challenges like inflation and geopolitical tensions. Digital transformation is at the top of agendas, ESG not as much so.

74% of Saudi CEOs are optimistic about the Kingdom's economic growth, with 60% confident about global growth. That is according to a new survey by consulting firm KPMG, conducted as part of its global CEO Outlook series.

“While it is unsurprising that the economic climate is a top concern for business leaders, they have learned to navigate the unpredictable by realigning their workforces, untangling supply chain disruptions and adapting to geopolitical and economic impacts over the last three years,” said Abdullah Al-Fozan, Chairman and CEO of KPMG in Saudi Arabia.

Strategies important for achieving growth objectives over the next three years

Confidence in the regional economy is so high, in fact, that only 20% of Saudi CEOs believed that a recession was on the horizon, as compared with an incredible 90% of CEOs globally who believed a recession is coming in the next 12 months, though most believe it will be minor.

Respondents noted that the top strategies for achieving optimal growth in the next three years were organic growth (innovation, R&D, capital investments, and the like) and strategic alliances with third parties. Along with those strategies was the likewise important focus on mergers and acquisitions, which a previous report anticipated would be an area of huge growth for Saudi Arabia this year.

“The significant demand we are seeing from international investors looking to tap into this exciting growth potential is a testament to our success to date and points to a bright future,” said Khalid Al Hussan, CEO of Tadawul Group (the parent company of the Saudi Stock Exchange).

Top operational priorities to achieve growth objectives over the next three years

Not fully convinced on ESG

Saudi business leaders are not as convinced by ESG imperatives as compared with their international counterparts. The percent of CEO in the Kingdom that believe ESG initiative can improve financial performance fell from 48% to 40%.

Only 34% of Saudi CEOs say they would be interested in investing at least 6% of their revenue into sustainability programs. That number is surprisingly lower when compared with 62% of global CEOs that would be willing to make those investments into sustainability.

Some of the top concerns on being able to deliver on ESG strategies include having the necessary technology to measure and track ESG initiatives, and identifying and measuring agreed-upon metrics. 14% of CEOs in the Kingdom saw the failure to create value from ESG investments as a major obstacle (a previous report from KPMG already highlighted the need for more scrutiny on ESG due diligence).

Top 5 challenges in delivering ESG strategy

The Kingdom has in recent years pushed an image of itself as a purveyor in green initiatives, with ambitious plans like Saudi Vision 2030 at the fore of that branding.

Importance of digital transformation

As far as technology and digital transformation, 80% of Saudi CEOs were happy to invest in innovation and areas where they may become obsolete – that is compared to 70% of business leaders worldwide.

“By employing advanced analytics and automation tools, companies can gain greater visibility and control over their supply chains, which can help them make more informed decisions and reduce risks,” said Mohammad Al-Razaz, CEO of OTO, a software development company.

According to CEOs in Saudi Arabia, which of the following is holding back progress on business transformation?

The majority of respondents said that the biggest obstacle to progress in business transformation is deciding on the right technology to invest in. Some 68% of Saudi firms see partnerships as a key part of their digital transformation, again highlighting the importance of mergers & acquisitions.

The concerted effort by the Saudi government to shift away from fossil fuels and diversify the national economy is spurring huge growth in the country’s tourism industry, the banking sector, and other areas where innovation and adoption of new technologies can be capitalized on.