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28 March 2024

84% of Gulf businesses are bullish

The vast majority of Gulf’s businesses are among the most positive globally about the impact of increased globalisation. (SUPPLIED)

Published
By Staff

Eighty-four per cent of businesses in the Gulf are planning turnover growth over the next two years, with growth expectations averaging 15 per cent per annum, according to the ICAEW Global Enterprise Survey 2010.

Around two-thirds are planning growth of six per cent or more a year, and more than 40 per cent are planning growth of 11 per cent or more, significantly higher than in globally-engaged businesses in the UK and businesses in other EU countries, the survey points out.

The vast majority of Gulf’s businesses are also among the most positive globally about the impact of increased globalisation, the survey said. Seventy per cent of the region’s businesses have plans to expand into or increase their market share in other countries in the next couple of years, with adapting their products or offering higher value-added products or services being key strategies.

Of those planning to boost foothold outside their home country, more than half (53 per cent) plan to increase share or expand to other countries in the Gulf and Middle East, in particular, Saudi Arabia (23 per cent).

Businesses in the Gulf are more likely than their counterparts in other regions to nominate Africa as a target for international expansion (34 per cent compared with less than 10 per cent of businesses in other regions).

Amanda Line, Regional Director, ICAEW Middle East, said: “The Gulf is typically seen as a gateway both to Africa and Asia because of its geographical position. No other region surveyed plans to focus as much on Africa, as the Gulf countries. However, while businesses see opportunities, they also face hurdles.”

Around a third are also interested in the emerging countries of Asia-Pacific, especially China (19 per cent). India is also a target for an equal number (19 per cent).

“Successful expansion into other markets requires knowledge of key issues as well as cultural ‘rules’ in these markets. It is critical to do your homework,” added Line.

However, businesses in the Gulf were more likely to say that their competitiveness had been adversely affected by changes in access to finance over the past year, with around half (51 per cent) reporting this.

Access to finance has been a particular challenge for Gulf businesses in the past year, with around a quarter of businesses stating that changes in interest rates, raw material costs and exchange rate moves have also had a negative impact on the business’ competitiveness.

“Success is also likely to hinge on your business’ ability to access finance. You might have to raise cash in your home market. While businesses expect that to become easier, it is key to keep your house in order, be transparent and provide as much and high-quality financial information as possible, whether your capital comes from capital markets, banks or other financiers,” said Line.

Nevertheless, the survey also highlighted that about one in four (26 per cent) of respondents believe that future anticipated changes in access to finance will have a positive impact on their business over the coming year compared with businesses in most other regions.

Gulf respondents were of differing views on other factors impacting on their business' competitiveness; some have benefited from changes in energy costs, others have not. The same goes for energy and oil/petrol price changes.

Although views on the likely impact of these factors on business over the next year is similarly divided, on balance, more expect changes in raw material costs to have a negative rather than positive influence.

The survey polled 1,753 respondents across the world between May 31 and July 9, 2010. Of the sample, 100 respondents were from the Gulf, comprising 50 in Dubai and 50 elsewhere (other UAE 19, Bahrain 17, Oman 1, Qatar 5, Saudi Arabia 8).