Fewer senior finance executives across the Middle East expect to witness economic growth this year compared to 2018. However, the outlook for companies and investments for the future overall remains positive.

According to the “2019 Global Business & Spending Outlook”, a survey released on Tuesday by American Express Middle East and Institutional Investor Thought Leadership Studio, 72 percent of senior executives foresee economic growth in the region, compared to 92 per cent in 2018. This decline is due in part to lower oil prices, but the growth outlook for the Middle East is in line with expectations worldwide.

Out of the 901 chief financial officers and other senior finance executives of firms with annual revenues of $500 million or more surveyed by American Express, 71 percent execs anticipate a substantial or modest expansion.

Additionally, growth expectations within the Middle East range from 67 percent of respondents expecting substantial or modest expansion in Bahrain to a high of 77 percent in Egypt. About 71 percent of respondents from Saudi Arabia and 72 percent from the UAE expect substantial or modest growth in 2019.

“Despite operating in unsettled times, senior finance executives across the region are concentrating on their day-to-day business but keeping an eye on the future,” said Mazin Khoury, CEO, American Express Middle East.

Only 10 percent of senior finance executives from the Middle East foresee a modest or substantial contraction in growth in 2019. Of the 72 percent who do expect to see growth in 2019, 45 percent anticipate modest expansion while 27 percent anticipate a substantial economic expansion.

“While they balance spending to drive topline growth with profitability, they’re pressing ahead with expansion plans, which include pursuing foreign trade opportunities, hiring and investing in next-generation technology,” Khoury added.

Technology dominates strategy

The survey revealed a growing awareness for the dramatic impact of next-generation technology on competitive dynamics within industries (31 percent up this year from 23 per cent last year).

Among those industries surveyed, the media entertainment/ travel (43 percent), wholesale/retail (41 percent) and construction (38 percent) industries are most likely to anticipate major disruption to their industry’s competitive dynamics.  

When asked about the greatest technology challenge to their industry across the region, senior finance executives cited the use of Artificial Intelligence (59 percent), fintech applications for payments, risk management or investment management (48 percent), and the Internet of Things (IoT), which includes embedded sensors and ubiquitous, internet connected devices (43 percent).

(Writing by Seban Scaria, editing by Daniel Luiz)

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© ZAWYA 2019