Predictions 2016: PwC ME Senior Partner, Hani Ashkar

Predictions 2016: PwC ME Senior Partner, Hani Ashkar
Lower oil prices are changing the dynamics of the Middle East, says Ashkar
We operate in a world which is
constantly changing, with more crossdependency across global markets than
ever. Our region is also certainly one of
the most dynamic. Looking ahead to
2016, not only do we expect global and
regional developments to create
challenges, but we also expect to see
opportunities for those who are able to
keep up with the pace of change. We,
like many industries, encountered these
complex challenges such as sustained
lower oil prices and rapidly shifting
demographics.
Going forward into 2016, we hope to see
opportunities for growth in the region,
and expect some of the factors that
dominated 2015 to be carried forward to
2016.
In today’s disruptive environment, as we
observed in our 18th Global CEO
Survey, creating a vision for the future is
more challenging than ever; however, to
find growth in a world with ever
changing boundaries, business leaders
will need to create value in new ways
through digital transformation; enhance
their capabilities by developing new and
different partnerships; and find
different ways of thinking and doing,
supported by a rich and diverse talent
pool.
More than anything, though, they’ll have
to develop a flexible vision that allows
them to pinpoint their company’s
strengths even as their customers,
sectors and markets change in front of
their eyes.
Lower oil prices
Going into 2016 there is a recognition
that lower oil prices are here to stay, at
least for the foreseeable future. In a
region where between 65%-95% of
government revenues come from
hydrocarbons, it’s inevitable that this is
already having an impact – not just on
governments and oil & gas companies,
but across all entities, corporate and
government.
While there will be challenges, there will
also be opportunities - those with the
strongest balance sheet and agile
management will be best placed to take
advantage. But, it won’t be easy.
Liquidity is tightening as governments
absorb cash to fund their plans. In
short, the ripple is being felt across all
organisations operating in the region.
With this continued downward pressure
on government spending, we expect
change and transformation to
accelerate, so overall we remain
optimistic about growth opportunities
in the region. A few of these big regional
changes have already picked up
momentum; from the expected
introduction of VAT, to the shift of
domestic energy consumption to more
renewable sources.
The digital era
Apart from megatrends such as
economic power shifts, resource scarcity
and demographic changes, another
factor that we expect to see playing a big
role in shaping 2016 is digitization.
We are seeing technological changes
impacting every aspect of our lives.
Today, people have greater access to
mobile phones than to electricity,
powering exponential growth in global
data generation.
A major challenge we all face is how to
take full advantage of the opportunities
but at the same time managing risk and
maintaining trust. Cyber security, for
example, has become a boardroom issue
– with consequences stretching beyond
the balance sheet to areas such as
company reputation - managing this
effectively has become a hot topic
amongst CEOs across the world, where
we’ve seen examples of leadership
resignations in the wake of high-profile
breaches.
Even as the Middle East region
continues to transform dramatically, it
will need to continue to address a range
of other important, complex challenges
such as nationalization programs, food
security and technological
advancements. We advise businesses to
ensure they track these big global
developments closely and adapt
accordingly - no matter where they are.
2015 was a year of challenge,
opportunity and transformation – and
we expect nothing less from 2016.
This article first appeared in Gulf Business in January 2016.
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