Confidence remains broadly high among the executives interviewed for the latest edition of the Business Barometer: UAE CEO Survey, carried out by Oxford Business Group (OBG), even though they face considerable challenges caused by growing global economic and political uncertainty.
As part of its survey on the economy, the global research and consultancy firm asked 110 C-suite executives from across the UAE's industries a wide-ranging series of questions on a face-to-face basis aimed at gauging business sentiment.
Over 60% of business leaders interviewed told OBG that it was likely or very likely that their company would make a signiﬁcant capital investment within the next 12 months, a similar percentage to the results in last year's survey.
An even bigger proportion (86%) reacted positively when asked about the country's level of transparency for conducting business, describing it as high or very high, relative to the region, which will sit well with the authorities as they look to attract new investors.
Most of the business leaders interviewed also appeared keen to embrace digital disruption, according to OBG's findings. Almost four-fifths (79%) said it was likely or very likely that their company would increase spending on smart technology, and research and development, within the next 12 months.
Asked which external event they thought could have the biggest impact the UAE economy in the short to medium term, beyond movements in commodity prices, the majority (over 60%) of respondents cited regional political volatility as their main concern, well ahead of multiple US Federal Reserve interest rate hikes, which was selected by 16% of those surveyed.
Volatility is number one concern
Speaking to International Investment, Oliver Cornock, OBG's editor-in-chief and managing editor for the Middle East, said: "Foreign direct investment into the UAE increased in 2017 but has not returned to the highs of the last decade nor indeed to the lows of the post-financial crisis period. Given the importance the various economic development strategies place on it though investors will not only be seeking reassurance that the regulatory frameworks in the UAE are conducive, they will also be looking at the fundamentals but also the risk profile of the country. It's therefore interesting to see that regional political volatility remains the single biggest concern of UAE businesspeople. It's therefore crucial that the authorities seek to reassert their safe-haven status."
Cornock continued: "While the UAE undoubtedly has significant competitive advantages, one of the factors that has come to the fore in recent years has been the cost of living. This has risen and risen and come up frequently as a major concern for foreign businesses, something that the authorities will no doubt be conscious of".
"There is perplexity in the UAE and elsewhere in the region as to the whole Brexit process, and the near stasis which has resulted in terms of UK government engagement with the Gulf. This position is unfortunate given the significant opportunities that currently exist for the UK."
Writing on the report's findings, Cornock pointed out that, while efforts to steer the economy away from a dependence on oil at the federate and emirate level were progressing, the UAE's finances were now also feeling the weight of a dominant real estate sector.
"Property prices in Dubai and Abu Dhabi have long been said to be bloated and over-inflated," he said. "In both markets, the corrections seen in 2018 might be welcome by some, such as individuals looking to buy, but the broader reflection is of economic uncertainty, albeit for differing reasons."