Deloitte: Middle East CFOs are the most optimistic globally
Deloitte: Middle East CFO Optimism bolstered by steady oil prices and large public expenditureDOWNLOAD
5 March, 2013 – CFO optimism has rebounded from historic lows in many countries as several political and economic “uncertainties” have been resolved or eased, according to Deloitte’s Q4 Global CFO Signals™ survey. However, many chief financial officers (CFOs) worldwide remain cautious in resuming aggressive capital spending and are adopting a “wait-and-see” approach that will likely yield a slow global recovery process.
“It’s no surprise that CFOs are still reacting to global economic volatility with caution and continued cost cutting,” said James Babb, Deloitte Middle East CFO Program Leader. “However, it is also interesting to see the shift in confidence levels amongst CFOs, from 2008 till today. In general, 2012 was a year of dampened outlooks and uncertainty. However, this year, optimism levels amongst CFOs in the Middle East are expected to pick up as the global economic outlook is shifting,” he added.
Based on the Deloitte survey, Middle East CFOs stand out for the strength of their outlook. A net 54% of CFOs are more optimistic about their companies’ prospects than six months ago — despite political instability and regional tensions. And for 2013, CFOs predict that optimism will translate into increased operating cash flows driven by higher revenues, stricter credit controls, and continued cost reductions. The latter is a priority shared with their global CFO peers — many of whom are waiting to also share their optimism.
In addition, survey findings show that many CFOs are focusing their recovery on efforts close to home. In the Middle East, the 30 percent of CFOs who are planning mergers & acquisitions (M&A) are aiming for targets aligned to existing businesses and within the MENA region. Other findings in the survey indicate that steady oil prices and large public expenditures are bolstering CFO optimism across the Middle East.
The survey also reveals a mixed recovery approach by region, CFOs across the board had three major considerations they are factoring in their outlooks: growth, talent capabilities, and implications of local policies and regulations:
There was no clear indication as to when CFOs expect conditions to improve. In Spain, 98 percent of CFOs surveyed believe there will not be an improvement in economic indicators before the second half of 2013, and, of these, 29 percent do not expect it before the first half of 2015. In Belgium and Ireland, CFOs are looking more toward 2014 for economic recovery. And in several of the Central European countries, CFOs believe things will get worse before they get better.
DTTL’s Q4 Signals survey tracked the thinking and actions of CFOs from more than 1100 global companies representing some 30 countries and geographies including North America, the Middle East, South Africa, Australia, and several European countries.