KPMG, a renowned provider of audit, tax, and advisory services in Saudi Arabia, released its latest CEOs’ Outlook report titled ‘Gearing up for growth and governance.’ The report offers insights into the global and local business and economic landscape for the next three years.
Drawing perspectives from 1,325 CEOs worldwide, including 50 CEOs in Saudi Arabia, the findings indicate that CEOs remain optimistic about long-term global growth, despite acknowledging short-term geopolitical and economic challenges.
The survey reveals that confidence in global economic growth over the next three years has rebounded to 71 percent, compared to earlier figures in 2022. In the case of Saudi Arabia, CEO confidence in global growth stands at 60 percent, while their confidence in the Kingdom’s own growth prospects over the next three years reaches 74 percent.
“While it is unsurprising that the economic climate is a top concern for business leaders, they have learned to navigate the unpredictable by realigning their workforces, untangling supply chain disruptions, and adapting to geopolitical and economic impacts over the last three years,” commented Dr. Abdullah Al Fozan, Chairman & CEO at KPMG in Saudi Arabia.
“Given the global ambiguity of the times, it should come as no surprise that pandemic fatigue and economic uncertainty – inflation, rising interest rates – were the two largest concerns for CEOs in Saudi Arabia and around the world in our latest survey,” he added.
Prioritizing Productivity and Digital Transformation in Saudi Arabia
KPMG conducted a recent survey and found that global growth expectations have not only reached but surpassed pre-pandemic levels, despite emerging new challenges. The survey included CEOs from various sectors in Saudi Arabia, providing insights into the diverse economic landscape. The distribution of CEOs surveyed in the Kingdom represented industries such as energy, infrastructure, automotive, manufacturing, consumer and retail, banking, and telecommunications.
While nine out of 10 CEOs globally anticipate a recession within the next year, the majority believe it will be mild and short-lived. In contrast, only 20 percent of CEOs in Saudi Arabia foresee a recession. Additionally, a third of CEOs in Saudi Arabia are actively preparing their businesses for the expected contraction, compared to 76 percent worldwide.
Around 63 percent of CEOs in Saudi Arabia and 73 percent globally predict that a recession will disrupt growth by 2025. Moreover, the majority of CEOs believe that a recession will pose challenges for post-pandemic recovery and impact their earnings.
However, CEOs have implemented resilience measures to better navigate short-term challenges compared to two years ago. In Saudi Arabia, CEOs are focusing on productivity improvement, cost management, and reassessing digital transformation strategies.
Planning and Agility: Opportunities in Times of Uncertainty
As CEOs prioritize protecting their businesses from a potential recession, the survey suggests that progress on Environmental, Social, and Governance (ESG) initiatives may suffer. Nearly half of the CEOs in Saudi Arabia, as well as globally, are pausing or reconsidering their existing or planned ESG efforts in the next six months due to economic uncertainty.
“This does not mean they are no longer bullish; 54 percent of Saudi Arabia-based CEOs still have a moderate appetite for mergers and acquisitions,” Al Fozan concluded.
In terms of organizational growth strategies over the next three years, CEOs in Saudi Arabia emphasized organic growth, strategic alliances, and managing geopolitical risks as the most important factors.
Despite a slight decrease in the appetite for mergers and acquisitions, as broader economic concerns persist, CEOs in Saudi Arabia still express interest in such activities, albeit at a lower rate compared to 2021.
“As the possibility of recession looms, many are already prepared with a deep focus on planning and agility. Some see opportunities through this fog of uncertainty brought on by the promise of harnessing better technology, talent, and ESG,” added Al Fozan.
