22nd Annual Global CEO Survey — Middle East findings
The overall message from Middle East CEOs who took part in this year’s 22nd CEO Survey is clear. Whilst last year we saw a dramatic jump in optimism, our CEOs have curbed their enthusiasm both at a global, and regional level.
What’s on Middle East CEOs agenda for 2019?
Following a significant uptick in optimism last year, Middle East CEOs are more cautious about growth in the region. Only 28% of our CEOs were ‘very confident’, on revenue growth over the next 12 months compared to 33% last year. This is lower than global CEOs, 35% of whom felt ‘very confident’ about their company’s revenue growth prospects.
Globally, we see a 9% drop in the percentage of CEOs who are ‘very confident’ about their revenue growth prospects over the next three years, with many regions experiencing low levels of confidence. Whilst regional CEOs are more optimistic about medium-term prospects compared to the shortterm, only 40% are ‘very confident’ about medium term revenue growth - a record low that we reached in last year’s survey and have maintained.
Middle East CEOs are also more pessimistic about the short-term global economic outlook for 2019. Only 28% of Middle East respondents thought global growth would improve in the next 12 months, compared to 42% in our global survey.
Taken as a whole, the CEO confidence story in our region is a sobering one.
Middle East CEOs are adapting to the sustained lower growth environment in the region. Like their peers globally, Middle East CEOs are prioritising operational efficiencies to drive growth and profitability over the next 12 months. Most strikingly, the proportion of regional business leaders who expect their headcount to fall is more than double the global figure (43% vs 19%).
Fewer Middle East CEOs are focused on organic growth (62% vs 71%) and launching new products (51% vs 62%) than their global peers. However, Middle East CEOs are more open to new strategic alliances or joint ventures (49% vs 40%) than global CEOs.
Middle East CEOs are generally looking closer to home for growth. Saudi Arabia is firmly on the minds of CEOs based in other parts of our region. As the engine of growth for the region and with the Vision 2030 transformation continuing at pace, it is clear that to be successful in the region, our CEOs believe, you have to be successful in the Kingdom. Egypt has emerged this year as a key growth market for Middle East companies (identified by 15% of CEOs in the region), second only to Saudi Arabia (28%) in the rankings. Regional CEOs have also shown interest in Iraq (10%).
Regional CEOs are grappling with rapidly changing consumer behaviour as the digital revolution, initially slower to have an impact in the Middle East, takes hold at speed. Middle East CEOs see changing consumer behaviours (79%) and the speed of technological change (75%) as the most significant threats to their organisations.
The overwhelming majority (91%) of our regional CEOs believe artificial intelligence (AI) will significantly change how they do business in the next five years, in line with the global results. However, only 23% of Middle East CEOs say they have already introduced AI initiatives, barely half the global figure, suggesting regional companies need to catch up fast.
Two things are holding back regional organisations, according to CEOs: data and skills. Only 13% believe the quality of their company’s data is adequate for assessing customers’ preferences and needs. Some 61% of regional CEOs cited the lack of analytical talent as the primary reason they do not have adequate information.
CEOs in the Middle East share a pragmatic view of the short-term worldwide outlook with global counterparts: only 28% of respondents in the region believe global economic growth will improve in 2019, compared with 52% in 2018. Globally, 42% of CEOs expect an improvement this year.
The proportion of regional CEOs who are positive about their companies’ immediate prospects is also lower than the global result: 28% said they are ‘very confident’ about revenue growth over the next 12 months, compared with 35% globally.
Their caution is to be expected, given that oil prices started to fall again in late 2018, growth in the private sector has stalled in the region and consumer spending is still feeling the impact of job cuts between 2015 and 2017. Yet despite the current uncertainty, our CEOs remain slightly more upbeat about their companies’ medium-term prospects compared to global peers.
Overall 90% of CEOs are “confident” about revenue growth over the next three years, almost unchanged from 2018 (94%) and higher than global CEOs this year (86%), however only 40% of this figure were ‘very confident’.
There is a consensus among Middle East CEOs that new market opportunities still exist: Egypt has emerged as a major territory where an increasing number of regional CEOs are hoping to grow their business. Our survey also indicates that Middle East CEOs are aligned with their peers worldwide in prioritising operational efficiencies to remain fit for growth.
Lastly, our CEOs share their global counterparts’ keen awareness that new technology – in particular artificial intelligence (AI) – could dramatically strengthen their companies’ competitiveness.
Overall, the region’s CEOs see 2019 as a year to keep one eye fixed on shortterm hazards and risks, without losing sight of future opportunities.