There is still optimism for SMEs in the Middle East – expert

Business leaders in the Middle East remain optimistic about the economic outlook for 2016 despite low oil prices, according to research from the Young Presidents Organisation.

A combination of factors including advancements in technology and better global connectivity were cited as reasons for continuing confidence despite oil prices fluctuating at around $30 a barrel.

Speaking to Gulf Business ahead of the YPO Dubai conference in March, chief executive Scott Mordell said the region benefitted from strong cash flow and the present lack of taxes would continue to encourage investment in the United Arab Emirates and the region as a whole.

He said: “It is quite a challenging time to be a business in the Middle East. But we are seeing quite a bit of technology that is not oil dependent. I think we are going to see a maturing of some of the things that will take out the middleman in businesses, allowing access to resources and markets. The more that happens and it becomes more efficient, the more opportunity.

“But with oil going as low as it has gone…it’s a difficult time for them until they can align their costs with the change in revenues.”

He added: “There is so much to appreciate in the region. Taxes are non-existent in many ways, which we cannot say about many of the under-developed countries. And there’s also a flow of capital which moved pretty well through the region just because it’s always been about global trade. And the technology activity we’re seeing means there is a greater appeal to relocate to the region.

“So for start-up businesses, I don’t think the oil prices and the other factors are really an issue.”

In the last few weeks oil prices have become increasingly volatile even reaching a 13-year low of close to $27 a barrel.

Analysts have pointed to chronic oversupply in the market, alongside the re-emergence of oil exporter Iran and the economic difficulties in China as causing the increasing fluctuations.