Dubai: CEOs in the UAE are quite confident about prospects for their businesses in 2023 – it’s the global economy that they are not so sure about. In fact, these CEOs are busy preparing for a ‘battered global economy’, according to the latest KPMG survey on business sentiments in the C-suite.
In the survey, 88 per cent of CEOs heading operations in the UAE were confident about growth prospects for the local economy, while 96 per cent said the same when it comes to how their own industry will fare in 2023.
A number of factors are in play in explaining this confidence. “The UAE has a number of advantages that allow it to withstand global economic shocks – the government has bolstered its strategic location,” the report says. Then there are the ‘strong financial reserves and large sovereign wealth fund with favorable investor home economies, a progressive policy of economic diversification and free zones.
"CEOs worldwide, on the other hand, have a less optimistic view with the direction of the global economy, with 86 per cent saying they agree that an economic downturn is looming."
- UAE CEOs are now more intent than ever before to get a firm grip on their supply chain.
- If that means more on-shoring, that's how they plan to do it.
- Expansive overseas operations is not high on the agenda for many UAE corporate chiefs.
- Instead, they are looking to fold those operations back into the local/headquarters.
- A lot of them are giving serious thought on the short-term investment priorities.
But they do have concerns too. “In the UAE, the biggest concerns that CEOs reported in our survey were talent, and economic factors including rising interest rates, inflation and an anticipated recession,” said Nader Haffar, Chairman of KPMG Middle East & South Asia, and Chairman and CEO, KPMG Lower Gulf.
“Local CEOs said digitization has been key to preparing for a global recession. Within the UAE, business leaders are concerned about protecting their partners and suppliers, with 90 per cent of CEOs saying that protecting their supply chains from cyberattacks was just as important as building their own organization’s cyber defenses.
“Nearly all CEOs surveyed in the UAE report having a very aggressive digital strategy in place to ensure their companies are not only improving their IT infrastructure, internet services and payment systems, but are also well prepared for cyberattacks.”
Business leaders in the UAE in particular are more optimistic than their global counterparts when it comes to economic growth and corporate earnings over the next three years
Bring supply chains closer
Then there is the focus on creating internal supply chain networks, something they have to learn since the pandemic hit with all its attendant disruptions.
“Many businesses are turning to ‘on-shoring’ more aspects of their supply chain with 32 per cent of CEOs in the UAE said they planned to source domestically to enhance production resiliency over the next three years,” said Haffar.
By now, 64 per cent of UAE businesses have diversified their supply chains, which is 39 per cent higher than the tally in 2021. Another defensive move was to transfer overseas operations back to local, which was done by 64 per cent of CEOs polled by KPMG.
Not just that, 44 per cent have reconsidered investment strategies against the backdrop of what might happen to growth chances in an uncertain global economy. If that translates into lower spending, that could turn out to be a bigger concern.