Middle East chief executives share global gloom on economic prospects

Last year, there was a record number of CEOs who said they were optimistic about global economic growth, and only 29 percent said they were pessimistic. (File/AFP)
Short Url
Updated 21 January 2020

Middle East chief executives share global gloom on economic prospects

  • Only China and India among the major economic blocs were less pessimistic on average
  • Trade wars, geopolitical tensions and climate change threats were the factors weighing most heavily on executive minds

DAVOS: Global business chiefs are more pessimistic about prospects for the world economy than for many years, and senior executives in the Middle East are among the most gloomy, according to the annual survey of chief executive officers’ opinion released at the World Economic Forum annual meeting in Davos.

The poll — by consulting firm PwC — showed that a record number of CEOs were pessimistic about the international economy, with an average of 53 percent predicting a decline in the rate of growth in 2020.

While bosses in North America and Europe were particularly downbeat about prospects, with 63 percent and 59 percent saying they thought things would get worse this year, CEOs in the Middle East were also more gloomy than average, with 57 percent predicting lower growth this year.

Only China and India among the major economic blocs were less pessimistic on average, but there was a sharp decline in the number of Chinese executives who wanted to do business with the US — just 11 percent identified the US as their most attractive market, compared with 59 percent two years ago.

Trade wars, geopolitical tensions and climate change threats were the factors weighing most heavily on executive minds — apart from the standard complaints about over-regulation by governments.

Unveiling the 2020 results, PwC chairman Bob Moritz said: “Given the lingering uncertainty over trade tensions, geopolitical issues and the lack of agreement on how to deal with climate change, the drop in confidence in economic growth is not surprising – even if the scale of the change in mood is.”

Last year, there was a record number of CEOs who said they were optimistic about global economic growth, and only 29 percent said they were pessimistic.

“These challenges facing the global economy are not new. However, the scale of them and the speed at which some of them are escalating is new, the key issue for leaders gathering in Davos is: How are we going to come together to tackle them,” Moritz added.

The poll of 1,600 CEOs in 83 countries was taken toward the end of last year, before tensions in the Middle East escalated in the Arabian Gulf, but before the tentative “phase one” agreements on world trade between the US and China.

The poll was also taken before the Australian wildfires further highlighted fears of climate change — a major focus of the WEF meeting.

The poll also found CEOs less confident than ever in their own companies’ prospects, with only 27 percent of CEOs saying they are “very confident” in their own organization’s growth over the next 12 months – the lowest level PwC has recorded since 2009 and down from 35 percent last year.


Automechanika Riyadh opens, featuring leading global suppliers

Updated 37 min 32 sec ago

Automechanika Riyadh opens, featuring leading global suppliers

  • Saudi auto deals grew 40 percent last year with influx of female buyers

RIYADH: Leading names in the global auto services industry are out in force at Automechanika Riyadh — which opened on Monday at Al Faisaliah Hotel — vying to increase their share of a growing market expected to reach a value of $10.15 billion by 2023.

Automechanika Riyadh is the regional arm of the world’s largest trade fair, congress and event organizer, Messe Frankfurt, which has licensed the Automechanika brand to event organizer Al Harithy Company for Exhibitions (ACE) Group.

Mansour Abdullah Al-Shathri, vice chairman of the Riyadh Chamber of Commerce, inaugurated the trade event, which will run from Feb. 24-26.

It was revealed that Saudi auto deals grew approximately 40 percent last year, with female buyers accounting for between 10-15 percent of sales after the landmark decision to allow women to drive in the Kingdom for the first time.  

“International suppliers are stepping up their marketing for the resurgence in Saudi’s market, and this impacts the entire supply chain,” said Mahmut Gazi Bilikozen, show director for Automechanika Riyadh.

“While there is growth potential in the market, it is becoming a more competitive landscape and one which will also have to contend with evolving customer preferences. The conditions are ripe for new business relationships for those wishing to succeed in this transformative environment,” he added.

Zahoor Siddique, vice president of ACE, said: “Future vehicles will become more complex and challenging for the aftermarket industry. It is therefore imperative for manufacturers, local garages, technicians and mechanics to upskill and remain above the curve. 

 “Automechanika Riyadh is one such platform that can enable us to share and learn what the industry needs to unleash its potential.”

Two major US players — disc pad producer Giant Manufacturing and United Motors Mopar, the Kingdom’s sole distributor of Chrysler, Dodge, Jeep and Fiat cars — forecast a bullish market over the next few years.

Giant’s vice president, Eli Youssian, said he believed car sales in the Kingdom would grow by 9 percent annually until 2025, while United Motors District CEO Hassan Elshamarani expected another three million female drivers to be on the Kingdom’s roads by the end of the year.

Both Giant and United Motors launched new products at the show, with the former rolling out its new German-engineered Euro Premium Metallic Disc brake pads, and the latter introducing its Magneti Marelli spare parts.

The high potential of the new-look Saudi automotive landscape has also struck a major chord with South Korean suppliers.

The show’s Korean pavilion is hosting new-to-market entrants and existing suppliers all looking for business partners. With products from wiper blades to filters and air-conditioning parts to brake pads, the Korean contingent was positive about the Kingdom’s prospects.

One exhibitor, D Only Automotive, is looking to ring fence 10 percent of the Saudi brake market. “With more vehicles on the road, demand for brakes will increase, (so) we believe this is possible,” said President Jeon JaeWon.

Global research and analytics firm Aranca — Automechanika’s knowledge partner — has forecast that Saudi Arabia’s automotive spare parts and service market will grow at approximately 6 percent over the next five years to reach a value of $10.15 billion by 2023.

“The spare parts and service market for passenger cars alone is expected to eclipse $6.9 billion by 2023,” said Vishal Sanghavi, Aranca’s automotive practice head.