Mubasher: Businesses in Saudi Arabia are forecasting a growing revenue and more business opportunities in 2018 when compared to last year, according to the Ernst & Young (EY) Growth Barometer, an annual survey of entrepreneurs' and middle-market leaders' growth strategies.
Robust revenue and further business opportunities in the oil-rich kingdom are deemed part of the Saudi Vision 2030 reforms set by Crown Prince Mohammed bin Salman in a bid to maximise the participation of the private sector.
The EY report clarified that 33% of middle-market businesses in the kingdom expect more than a 10% growth this year, while six in ten are targeting a growth of 6-10%, an increase of 24% compared to the results of last year’s survey.
“The decision of MSCI to add Saudi Arabia to its Emerging Markets Index is a testament to the progress being made in the Kingdom and the positive effects of the reforms,” said Saudi Arabia managing partner at EY Fahad Al Toaimi.
“The ambitious growth expectations of Saudi middle market companies cited in the EY Growth Barometer far outstrip the International Monetary Fund’s 2018 GDP growth forecast of 1.7%,” he added.
For his part, Abdulrahman Albizioui, Saudi Arabia Transaction Advisory Services Leader at EY, stated that cash flow “is one of the highest risks” for firms’ growth, which needs working capital. He added that in line with fast-growth firms across the globe, the gap between long-term financing and short-term needs represents “a constant challenge”.
“Growth strategies such as technology investment, entry into new sectors and sub–sectors, and new markets, all put a strain on working capital. Lack of cash in the balance sheet is a significant challenge to growth not just in Saudi Arabia, but across the world,” Albizioui noted.