Optimism in long-term growth remains
Optimism in long-term growth remains
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The KPMG 2022 CEO Outlook surveyed Qatar’s CEOs on their 3-year outlook on the business and economic landscapes. Despite geopolitical and economic challenges, Qatar’s economic confidence over the next 3 years is 80 percent, down slightly from 2021 (84 percent) As companies continue to navigate the changing landscape resulting from the COVID-19 pandemic, 92 percent of Qatar’s CEOs report positive growth expectations in 2022 (88 percent in 2021).
Strategies important for achieving growth objectives over the next 3 years
2020
2021
2022
Source: KPMG 2022 CEO Outlook
Qatar's strategic investments and planning have enabled it to withstand external economic shocks whilemaintaining a resilient economy with sustainable growth that has averaged more than 5% (GDP growth) since 2009. The country’s economic diversification and business attraction efforts, as guided by the 2030 National Vision, have substantially strengthened the country’s economic prospects. The legacy of the FIFA World Cup Qatar 2022 by raising the country’s profile and spillover effects on non-hydrocarbon industries such as real estate, hospitality, sports and healthcare will help Qatar maintain long-term sustainable growth and create a wealth of opportunities for foreign investors. The hydrocarbon sector is also expected to continue to support the nation's economy, particularly with the North Field Expansion. These are reflected in the positive long-term growth projections for Qatar by the IMF and World Bank, indicating Qatar's strong long-term development prospects.
Sheikh Ali Alwaleed Al-Thani
CEO
Investment Promotion Agency Qatar
CEOs anticipate a recession — but they’re prepared
While confidence is up over the next 3 years, CEOs anticipate challenges in the shorter term. One out of 10 (12 percent) CEOs believe a recession will happen over the next 12 months, but 2 out of 5 (16 percent) feel it will be mild and short and 20 percent have plans in place to deal with it. In spite of shortterm recession fears, the increased confidence CEOs have for the longer term indicates they feelwell prepared to navigate their businesses through turbulent times. In fact, when asked about their confidence in the resiliency of the Qatar economy over the next 6 months — a period likely to be fraught with uncertainty and constant change — 92 percent still had a positive outlook.
While CEOs may be resilient, they’re also realistic about the challenges ahead. Seventy- two percentof CEOs believe a recession will upend anticipated growth over the next 3 years, and three-quarters (80 percent) also believe a recession will make postpandemic recoveryharder.Fifty-two percent of CEOs predict a recession will impact company earnings by up to 10 percent over the next 12 months.
Compared to 2019 and 2020, CEOs are better prepared to weather short-term challenges with resiliency measures in place, while still anticipating long-term growth. The top three steps include: boosting productivity (60 percent), managing costs (36 percent) and reconsidering digital transformation strategies (52 percent).
Top risks looking forward
Pandemic fatigue and economic factors — including the threat of rising interest rates and inflation — top the list of most pressing concerns for CEOs today at 28 percent and 12 percent, respectively. As we look to the next 3 years, risks are more interconnected than ever. Emerging technology rises in rank as the top risk and greatest threat to organizational growth. Supply chain/operational, regulatory andreputational concerns also jumped into the top five.
Risks to growth over the next 3 years
August 2022
1 Emerging/disruptive technology
2 Operational issues/Supply chain
3 Regulatory concerns
4 Return to territorialism
5Rising interest rates, inflation, etc.
6 Pandemic fatigue or continued uncertainty
7 Reputational risks
8 talent
Source: KPMG 2022 CEO Outlook
The buoyancy of Qatar’s economy is largely driven by the country’s continuous focus on LNG investments where the operating model helps the country to generate huge cash flows. Since renewables have not grown in the last few years at the expected levels, the demand for fossil fuels will continue and hence Qatar’s focus on LNG expansion is expected to put the country in a very strong position for at least the next 3 decades, fueling CEO’s optimism over their long-term growth prospects.
Gopal Balasubramaniam
Partner, Head of Audit
KPMG in Qatar
Managing geopolitical risk
Strategic alliances (28 percent), organic growth (24 percent) and managing geopolitical risks (24 percent) top the list of the most important strategies for achieving organizational growth objectives over the next 3 years.
CEOs indicate that geopolitical uncertainties will continue to impact their strategies and supply chains over the next 3 years. In fact, 96 percent of CEOs have adjusted or plan to adjust their risk management procedures considering geopolitical risk, and 44 percent of CEOs will be increasing measures to adapt to geopolitical issues to achieve their growth objectives. With geopolitics a key agenda item in 2022, CEOs need to be knowledgeable on the subject and how to navigate the risks. It’s important to make a geopolitical risk assessment part of their overall strategy.
Strategies important for achieving growth objectives over the next 3 years
Source: KPMG 2022 CEO Outlook
Bassel Gamal, CEO, Qatar Islamic Bank (QIB), says that the global economic environment remains uncertain, characterized by a number of challenges including elevated inflation and tightening of monetary policy. This imposes imported risks and challenges to GCC economies. Similarly, to other GCC countries, there is a positive sentiment in Qatar due to the high oil and gas prices as well as the government’s commitment to invest in the new phase of growth and to further diversify the economy. In fact, Qatar’s economy is expected to grow by 3.5 percent this year and 3.2 percent next year, making it the fastest growing economy in the GCC in 2023.
Qatar's economy is evolving, becoming more diversified. During the last few years, as the country has been preparing for the World Cup and creating a first class infrastructure, the focus has been on lending to government projects, but the private sector is growing in strength, and there's a determination to become a regional leader in education, healthcare, entertainment and tourism.
Mr. Bassel Gamal
CEO
Qatar Islamic Bank (QIB)
Increasing M&A and Strategic alliances Appetite
Over the next 3 years, M&A and Strategic alliances remain high despite economic concerns, with 60 percent of CEOs expressing a moderate appetite and 16 percent a high appetite. 80 percent of CEOs see the greatest impact over the next 3 years from structuring capital allocation, partnerships, alliances and M&A strategy. With increasing interest rates and borrowing costs, rapid Innovation will be the key to staying competitive. Deal makers may be taking a much sharper pencil to the numbers and focusing on value creation to unlock and track deal value, every step of the way.
The increased investment interest in Qatar creates an opportunity for Family businesses to consider strategic alliances and partnerships to support their growth ambitions and capture greater market share. Family Governance still poses a challenge in Family Businesses given the non-linear growth in Families compared to businesses.
Yacoub Hobeika
Partner, Audit
KPMG in Qatar
