Middle East Leaders Optimistic Towards Global Economic Growth in 2022: PwC

Economic Growth

The Middle East findings of the 25th edition of PwC’s global CEO survey finds that 82 percent of regional business leaders expect global growth to improve in 2022 – the survey reports the current sense of optimism is tempered by an awareness of familiar and emerging threats and risks.

A year ago, as the first COVID-19 wave subsided, Middle East CEOs felt able to look ahead with cautious confidence. Over the course of 2021, their positive short-term outlook strengthened as a result of the strong health response, commodity prices, rising consumer demand and strengthening fiscal positions. Consequently, 64 percent of the Middle East CEOs are now extremely or very confident about their company’s revenue growth prospects in 2022, markedly higher than the global figure of 56 percent. The survey also found that the top two markets for revenue growth are Egypt at 37 percent and KSA at 27 percent as well as US and China outside of the region.

“Middle East CEOs are looking forward, not back. We’re pleased to see that regional business leaders share our confidence that renewed growth lies ahead. CEOs who have built trust with their clients, people and wider stakeholders through the pandemic are in a very strong position. These business leaders are now looking beyond COVID-19 with a focus on delivering sustained outcomes.”

– PwC Middle East Senior Partner, Hani Ashkar

Investing in digital and talent: like their global peers, Middle East CEOs continue to digitise business operations, from supply chains to sales channels, as governments across the Middle East carry on with ambitious modernisation agendas. In total, 52 percent of Middle East CEOs plan double-digit investments in digital transformation over the next three years. This year’s survey indicates that a growing proportion of Middle East business leaders have grasped that success in the digital age requires skilled people as well as the latest technologies ‒ 46 percent of regional respondents plan double-digit investments in leadership and talent development over the next three years.

“Armed with new optimism, CEOs are fashioning a growth agenda that channels energies towards new business models, customer experiences and organisational efficiencies facilitated by the cloud and digital tools. Meanwhile, they are upskilling their workforces and developing tomorrow’s leaders. Indeed the CEO mindset has evolved greatly since PwC’s first global survey back in 1998, when one in five CEOs believed e-commerce would reshape competition.”

– Middle East Strategy and Markets Leader, Stephen Anderson

Cyber risks viewed as a leading threat: 57 percent of Middle East respondents say that cyber risks will have a negative impact on their company in 2022, higher than the global average of 49%. Middle Eastern companies appear to be more targeted than companies in other geographies due to reasons including a strong link with local governments and increasing regional geopolitical tensions.

As a result, 65 percent of regional business leaders believe cyber risks will limit their organisation’s ability to innovate in 2022 and 59 percent say these threats will undermine sales of products and services. The pandemic is also still a concern, with 48 percent of regional CEOs indicating that they are extremely or very concerned about health risks.

Climate change and equality: Middle East business leaders also trail their international peers in setting net-zero commitments, with five percent willing to commit to a target (22 percent globally). Meanwhile 29 percent of Middle East CEOs say gender representation rates are included in their long-term corporate strategies, compared to the global figure of 38 percent, and 14 percent include race and ethnicity representation rates. The overwhelming majority of Middle East CEOs have no personal financial motive to pursue climate change and equality goals. The bonus or incentive packages for five percent include greenhouse-gas reduction targets (vs. 13 percent globally) and for four percent include gender representation rates (compared with 11 percent globally).

“ESG is now an essential topic and will play a key role in reimagining in our region. From the strategic role that we will play globally in the energy transition, the imperative from a social perspective to drive employment and inclusion, and the importance of strengthening governance as we attract FDI and privatise swathes of the economy – governments are setting out bold plans and commitments. It is clear from our survey that CEOs and businesses need to catch up and focus to both play their part and, perhaps as importantly, start to capture some of the enormous opportunities embracing ESG has to offer.”

– Middle East Strategy and Markets Leader, Stephen Anderson

These issues are becoming more prominent – and will become critical to business success – given the recent public pledges by governments across the region on ambitious carbon reduction goals and to building more equal societies. Appointing a boardroom level executive with company-wide responsibility for setting and meeting climate change and equality goals, as well as linking CEO’s bonus and incentive packages to achieving net-zero targets are some of the recommendations PwC has outlined in their report as actions to take.

More Reads:

PwC’s full report

Deloitte: Audit Committees Should be More Prepared for Climate Change

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