The YouGov and McGill Consulting Group GCC Business Confidence Index gives insights into what the future might have in store.
The YouGov and McGill Consulting Group Business Confidence Index measures optimism across various factors of economic health that contribute to the growth and sustainability of businesses. It is part of a series of decision-making tools created by YouGov and McGill Consulting Group to help leaders make better strategic decisions.
According to the report, business confidence decreased in Q4 across all countries in the GCC, with the largest drop in Saudi Arabia (-6.86 points) and Bahrain (-6.72 points). Overall business confidence remained the most stable in the UAE, despite witnessing a decline of 0.60 points. Nader Sabry, Managing Partner at McGill Consulting Group stated that, “although we are experiencing a slight decline in optimism in the next 12 months, it’s nothing alarming as of yet.” He added, “this is an early warning sign to several executives in the region to start taking more innovative measures both on a operational and product development level.”
The Business Confidence Index indicates that most firms in the GCC remain cautiously optimistic regarding commercial agility, with more than half citing the optimization of operations as a key source of growth in the next twelve months.
Respondents are most optimistic about the financial services sector in Q4, which jumped eight places since last quarter. The increase was underpinned by growing confidence in the availability of investments, which improved by 7.6% since Q3.
Firms in the UAE remained timid in nature regarding debt financing, preferring to use internal resources before seeking external sources of financing. According to the Business Confidence Index, UAE firms demonstrated a higher level of confidence in the availability of internal financing sources than Saudi Arabia, particularly in equity from internal sources (45% vs. 33%). Conversely, respondents in Saudi Arabia revealed more confidence in equity from institutional finance than those in UAE (24% vs. 18%, respectively).
Political instability remained high on the list of concerns of firms operating within the GCC. While roughly one-quarter of respondents did not show direct concern, nearly one-third showed indirect concerns originating from geopolitical unrest. “Despite instability in the global economy, GCC markets have remained largely resilient, translating to comparatively optimistic growth forecasts for the next 12 months,” stated Sundip Chahal, CEO of YouGov MENA. Mr. Chahal added, “However, significant risks persist and the intensification of geopolitical tensions in the region could have a substantial impact. Mitigating such risks will require foresight and flexibility.”