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Growth Prospects in Saudi Arabia and UAE are Positive

Middle East : 18 March 2012

Outlook Shines Bright in Saudi Amid Global Economy and Regional Tensions

The HSBC First Quarter 2012 report entitled “Who’s At Risk in 2012?” stated that slight decreases in the price of oil have created little change in the near-term economic outlook for Saudi Arabia. Holding steady at $100 per barrel over a 24-month period, oil prices continue to generate high levels of Kingdom revenue, creating surpluses in the current account. Surpluses continue to support the currency, and provide resources for Saudi Arabia to expand foreign assets, mitigating any economic effects of the worldwide credit squeeze.

According to the report, the Kingdom’s budget continues as a surplus. The amount of reserves at the disposal of the Saudi Arabian government should help to maintain confidence, despite weakening oil revenue.

The banking system in Saudi Arabia is moving towards expansion, recovering from a credit squeeze stretching over 30 months. This expansion contrasts the position of neighbouring banking systems. Liquidity levels are strong and levels of capital high, leading HSBC to state that credit growth will continue the current momentum. Credit growth supports the private sector and creates an efficient multiplier for public expenditure increases.

HSBC bumped up 2011 real growth estimates. Despite expectations for headline expansion rates to drop sharply in the current year, HSBC attributes the declining oil output to the reemergence of Libyan crude. The report expects domestic demand to hold up.

The Saudi Arabian economy will experience substantial changes, in spite of the positive near-term outlook. Unemployment remains in the double digits for nationals, and demands of the Kingdom’s massive population of youth will not be met by the hydrocarbon wealth or rising public spending.

Also, demand has remained muted, in terms of those structural reforms with the potential to drive employment generation in the private sector.

The outlook remains mainly positive, especially when considered alongside the distressing global economy, escalating political tension in the region and unknown aftereffects of the 2011 Arab Spring. About 3.5 percent average growth is far ahead of growth seen in Western economies and compares well to emerging markets.

Public finances remain strong overall and the external accounts of MENA remain healthy, leaving the region much less vulnerable that many others affected by the ongoing worldwide credit squeeze and weaker global trade. MENA’s political climate is also indicating signs of normalizing.

The HSBC report also stated that aggregate figures disguise a wide gap in economic strength across the region, as well as variances in political order. Headline forecasts also tend to block well known and newly recognized political and economic risks that will affect performance in the near-term, according to the HSBC.

CFOs in Dubai Report Confidence in UAE Growth Prospects

A majority of CFOs in Dubai have plans to hire more staff, 72% according to a recent Robert Half UAE survey. The recruitment specialist’s report also found that 91% of respondents reported challenges locating professionals skilled in the financial sector. An impressive 91 percent of Dubai CFOs included in the survey have higher levels of confidence in UAE growth prospects, in comparison to last year. These are the highest confidence levels reported across the world.

Robert Half UAE is the global leader in recruiting finance and accounting professionals. The consultant firm is an S&P 500 member, and this recent survey covered 2,500 CFO respondents around the world.

The survey results found 72 percent of Dubai CFOs have plans to hire more permanent accounting and finance staff, with only 3 percent expecting cuts. This represents a 69 percent net increase. Increasing workloads, as well as more acquisitions and mergers, have created the demand for additional staff.

Dubai’s finance leaders held the top spot for confidence, tied with Brazilian CFOs. In Dubai, 91 percent of CFOs reported higher levels of confidence compared to last year, with 87 percent of China’s CFOs claiming greater confidence, 82 percent of Hong Kong’s CFOs and 79 percent of CFOs from Chile reporting signs of strong assurance.

Executives from Dubai reported high levels of confidence, coming in third place with 89 percent, behind Brazil’s executive responses of 97 percent and 93 percent of China’s executives reporting higher confidence. Dubai pulled in ahead of Austria (with 87%), Singapore and Chile (with 86% and 84%, respectively).

Executives in Dubai forecasted very healthy hiring across the first six months of this year, as 72 percent of finance executives have plans to increase staff and only 3 percent expecting to cut staff.

Executives in China also expect to hire more finance and accounting staff (the survey reported a net 50 percent increase), Brazil (with a 45% jump) and Germany (reporting a 32 percent increase). Japan, Singapore and Australia all reported an increase of 23 percent. Over half of the Dubai CFOs reported that increasing workloads are the main reason to expanding permanent staff, while around 26 percent attributed the need for greater staff to mergers and acquisitions.

Robert Half UAE’s associate director James Sayer stated that executives searching for highly strategic professionals focused on commercial avenues report the greatest levels of confidence. These professionals are needed to take advantage of growth opportunities within these businesses. Sayer noted that workloads continue to increase and rising M&A activities have resulted in greater demand for financial professionals.

Robust hiring forecasts create challenges for these executives, as 91 percent of Dubai CFO respondents reported difficulties in locating skilled accounting and finance professionals. Many other nations also reported hiring challenges, including Germany (81 percent of CFO respondents), Australia (80 percent of CFO respondents), the UK and China (both with 79 percent of respondents). Overall, almost nine in ten (or 89 percent) of the finance leaders surveyed reported concerns about losing their current staff to other job openings over the coming year.

Sayer stated that demand currently outweighs supply in terms of professional staff, and the CFOs report challenges when searching for talented staff, especially in compliance and finance functions. He noted that executives remain conscious of rehiring skilled staff to help the company reach growth targets throughout the coming year.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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