UAE Forecast for the Next Three Years – The Business Leaders’ Point of View
Written by Emanuela Lertora
Over the last three months, KPMG has surveyed some of the UAE’s key decision makers, CEOs and leaders from top organizations and emerging businesses, across economic sectors, to better understand their views and strategies regarding current and future market opportunities and challenges. All CEOs involved in the study were confident that their organizations would grow over the next three years, with 60% of the CEOs confident that organic growth—such as expanding their customer base or entering into new business lines or geographies—would most effectively drive stakeholder value over the next three years.
KEY GROWTH GENERATORS FOR THE NEXT THREE YEARS
• New products. Half of the interviewed CEOs believe that new products will be the most important source of growth over the next three years. On the other hand, less than 10% of CEOs believe that new channels will be important. This is perhaps a sign that the omnichannel revolution that is shaking the global retail industry has yet to gain real traction in the UAE across a wider economic horizon.
• New markets. The geographic areas with the highest growth potential (identified by the UAE CEOs) are the GCC (including the UAE); China; and other Asian countries (excluding India).
• Digitalisation. The interviewed UAE CEOs believe that digitalization will shape the future of their businesses over the next three years.
• Innovation. UAE CEOs have tremendous faith in the ability of their organizations to move new ideas through their value chain, with external collaboration seen as a particular strength. Almost half of UAE CEOs admit that their organizations take an ad-hoc approach to innovation, which means that innovation occurs on some projects or within some departments but there is no repeatable approach or standardization.
ISSUES THAT COULD IMPACT BUSINESS GROWTH IN THE UAE
• Global economic factors. This includes issues such as the price of hydrocarbons and Chinese economic growth.
• Geopolitical factors. Political factors and social instability, such as the ongoing disturbances in Yemen and Syria and Donald Trump’s recent election, could have unforeseen implications for the region.
• Oil price. Although only 25% of the UAE’s GDP can be directly attributed to its hydrocarbon wealth, there are numerous knock-on effects of a lower oil price, including a decline in real estate sales to MENA investors.
• Competition for talent. CEOs are finding it more difficult to recruit specialized talent as opportunities elsewhere continue to blossom and there is greater competition for Emiratis—both seasoned and fresh graduates—who are increasingly aware of the need to contribute to organizations’ bottom lines.
• Cybercrime. The region is increasingly prone to hacking and other forms of cyber-crime.
KEY CEO STRATEGIES FOR THE NEXT THREE YEARS
• Focus on the core business. Most CEOs believe that it is unlikely that their organizations will significantly change focus over the next three years. Strengthening their core competencies will continue to be the main focus.
• Hunt for talent. Most CEOs agree that there is still a strong need to hire new talent. While the UAE’s schools and universities are producing greater amounts of high-potential human capital, there is still a heavy reliance on expatriate labour to satisfy the local job market.
• Headcount strategy. While just under two-thirds of CEOs are planning to increase their headcount over the next twelve months, almost 90% of CEOs are expecting to increase their headcount over the next three years.
THE MOST WANTED JOB SKILLS ACCORDING TO THE UAE CEOs
Over the next three years, CEOs predict a gap in specialist skills in the research and development and strategy sectors. Regarding strategic skills, CEOs are concerned about data and analytics, cyber security, digitalization and innovation.