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Abu Dhabi, UAESunday 21 October 2018

Middle East corporate spending set to rise in 2018, says Amex

Majority of finance executives plan to increase investment by at least 6% – survey

American Express Middle East says more corporate spending is on the way in the Mena region this year. /Kai Pfaffenbach/Reuters
American Express Middle East says more corporate spending is on the way in the Mena region this year. /Kai Pfaffenbach/Reuters

Corporate spending in the Middle East and North Africa (Mena) is expected to rise this year, with almost three quarters (74 per cent) of the region’s finance executives planning to “moderately” ramp up investment by at least 6 per cent, according to a survey by card services firm American Express Middle East.

“We’re seeing spend directed to specific growth initiatives such as meeting customers’ evolving needs and emerging technologies,” Saud Swar, vice-president for commercial business and head of UAE at Amex, said on Monday.

The UAE and Saudi Arabia were among the top five countries with the highest investment growth expectations, according to Amex and think tank Institutional Investor’s 2018 Global Business and Spending Outlook. The UAE ranked third after China and Japan, with 84 per cent of survey respondents saying they planned to increase spending by 6 per cent or more.

Saudi Arabia followed in fourth position, with 83 per cent of respondents from the kingdom saying they would increase spending at the same level.

The survey of 870 global chief financial officers and other senior finance executives –17 per cent of whom were from Mena – pointed to a prevailing confidence in the year ahead, reflecting an improved investment climate and global economic growth.

The vast majority – 90 per cent – of Mena respondents said they anticipated "modest to substantial" economic expansion in their country in 2018, slightly higher than the worldwide average of 85 per cent.

Global GDP growth is forecast at around 3.9 per cent for this year and next, according to the International Monetary Fund (IMF), while oil reached $80 per barrel last month – a substantial pick-up after three years of low oil prices, which has weighed on Mena economies.

The majority of Middle East leaders will take a “back to basics” approach to finance strategies during the year ahead, Amex said, with 77 per cent citing ‘improving customer satisfaction" as their top focus for investments in 2018.

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Two-thirds plan to penetrate new markets – the survey did not list respondents’ preferred target markets – while 44 per cent said they would invest in initiatives to transform their business. Saudi Arabian executives were the most eager to enter new markets, at 83 per cent.

Companies also said they plan to develop new product and service offerings (53 per cent) and streamline processes and upgrade technologies (27 per cent).

Reflecting increased optimism, just under three-quarters (73 per cent) of Mena respondents said they expect their company’s workforce to grow by at least 6 per cent in 2018, pointing to an uplift in the regional employment market.

More than half (59 per cent) of respondents plan to expand their use of temporary and part-time workers and 43 per cent plan to move positions from overseas to domestic locations, compared to 19 per cent who expect to outsource and offshore work, pointing to a rise in "onshoring" to meet staffing needs.

“Financial leaders are less anxious about economic surprises and have a well directed view on how to drive business growth,” Mr Swar concluded.