Middle East CFOs are the most optimistic globally, finds Deloitte
Source: Deloitte , Author: Posted by BI-ME staff
Posted: Tue March 5, 2013 7:16 pm

UAE. CFO optimism has rebounded from historic lows in many countries as several political and economic “uncertainties” have been resolved or eased, according to Deloitte’s Q4 Global CFO Signals™ survey.

However, many chief financial officers (CFOs) worldwide remain cautious in resuming aggressive capital spending and are adopting a “wait-and-see” approach that will likely yield a slow global recovery process.
 
“It’s no surprise that CFOs are still reacting to global economic volatility with caution and continued cost cutting,” said James Babb, Deloitte Middle East CFO Program Leader.

“However, it is also interesting to see the shift in confidence levels amongst CFOs, from 2008 till today. In general, 2012 was a year of dampened outlooks and uncertainty. However, this year, optimism levels amongst CFOs in the Middle East are expected to pick up as the global economic outlook is shifting,” he added.
 
Based on the Deloitte survey, Middle East CFOs stand out for the strength of their outlook. A net 54% of CFOs are more optimistic about their companies’ prospects than six months ago — despite political instability and regional tensions.

And for 2013, CFOs predict that optimism will translate into increased operating cash flows driven by higher revenues, stricter credit controls, and continued cost reductions. The latter is a priority shared with their global CFO peers — many of whom are waiting to also share their optimism.
 
In addition, survey findings show that many CFOs are focusing their recovery on efforts close to home. In the Middle East, the 30 percent of CFOs who are planning mergers & acquisitions (M&A) are aiming for targets aligned to existing businesses and within the MENA region. Other findings in the survey indicate that steady oil prices and large public expenditures are bolstering CFO optimism across the Middle East.
 
The survey also reveals a mixed recovery approach by region, CFOs across the board had three major considerations they are factoring in their outlooks: growth, talent capabilities, and implications of local policies and regulations:
 
- Growth:  Economic conditions, investment, and solid execution are essential elements for growth. Around the globe, however, CFOs’ approaches vary:
 
o   47 percent of Middle East CFOs are planning for strategic alliances as a risk adverse approach to inorganic growth.
 
o   In North America, for example, capital investment expectations, research and development, and marketing/advertising investment expectations hit survey lows;
 
o   Risk taking varies throughout Europe, with only 12 percent of CFOs in the Netherlands saying now is time to take risk onto their balance sheets; in other countries, such as Belgium, however, risk appetite has increased;
 
o   Australia is prioritizing organic expansion and investment in new products and services;
 
 
- Local issues a primary driver:  While several global factors are weighing on CFO decision-making for 2013, implications of local issues and policies remain top of mind:
 
o   Implications of governmental policy are consistently among CFOs’ top sources of financial and economic uncertainty.
 
o   In North America, health care reform, the outcome of U.S. elections, and the “fiscal cliff” weighed on CFOs;
 
o   Eighty-eight percent of CFOs in Spain believed new government tax burdens would negatively impact their business;
 
o   In India, more than 54 percent consider inflation and its subsequent pressure on commodity prices as key economic concerns;
 
o   In the United Kingdom, CFOs believe the Bank of England’s monetary policy, including interest rates, inflation, and the availability of credit, is on track;
 
- Talent and capabilities:  Even in an unclear economy with threats of staffing reductions still lingering, CFOs are thinking strategically about talent capabilities and upcoming employment challenges:
 
o   In South Africa, CFOs listed skills shortage as their biggest business risk factor;
 
o   In India, specialized workforce and its development remain a key issue;
 
o   Some CFOs in Central European countries view  quality and cost of talent as crucial to future growth;
 
o   And in Australia, three quarters of CFOs plan to invest in workforce training and development to improve productivity.
 
There was no clear indication as to when CFOs expect conditions to improve. In Spain, 98 percent of CFOs surveyed believe there will not be an improvement in economic indicators before the second half of 2013, and, of these, 29 percent do not expect it before the first half of 2015. In Belgium and Ireland, CFOs are looking more toward 2014 for economic recovery. And in several of the Central European countries, CFOs believe things will get worse before they get better.
 
DTTL’s Q4 Signals survey tracked the thinking and actions of CFOs from more than 1100 global companies representing some 30 countries and geographies including North America, the Middle East, South Africa, Australia, and several European countries.
 
To download a copy of the full Q4 Global Signals report including geographic summaries, visit:  www.deloitte.com/q4globalsignals.

About Deloitte & Touche (M.E.):

Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence for over 85 years. Deloitte is among the region’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with over 2,500 partners, directors and staff.

It is a Tier 1 Tax advisor in the GCC region (International Tax Review World Tax 2010, 2011 and 2012 Rankings) and was recognized as the 2010 Best Consulting Firm of the Year in the Complinet GCC Compliance Awards. In 2011, the firm received the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).

About Deloitte:

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence.

Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: November 25, 2014
INTERNATIONAL. In the end, it is unlikely that the territorial Islamic State can survive. The truth is that Turkey, Iran and Saudi Arabia are all waiting for the U.S. to solve the problem with air power and a few ground forces. These actions will not destroy IS, but they will break the group's territorial coherence.
date:Posted: November 25, 2014
BAHRAIN. The "increasingly deregulated and competitive economic environment is facilitating rapid growth in business development within the private sector."
date:Posted: November 25, 2014
INTERNATIONAL. Participants in the global oil market are eagerly awaiting the Opec meeting on November 27, which could potentially set the tone and the direction of oil prices.
INTERNATIONAL. In the end, it is unlikely that the territorial Islamic State can survive. The truth is that Turkey, Iran and Saudi Arabia are all waiting for the U.S. to solve the problem with air power and a few ground forces. These actions will not destroy IS, but they will break the group's territorial coherence.
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