Second Arab Business Intelligence report reveals strong fundamentals of business confidence across the Arab World

In a year marked by conflict in the Arab world, its CEOs and business leaders (especially those outside the oil markets) score, for the second year running, some of the highest levels of business confidence in the world.

The Middle East and North Africa region has this year become the tenth largest economy in the world. The GCC economies alone rank 16th, according to a recently published report. Economic confidence has traditionally been associated with high oil prices. The ABIR somewhat challenges this myth by looking across nine industry sectors and 18 Arab countries. Almost 80% of the senior executives interviewed reported better economic conditions than last year. The outlook for 2007 is even more favorable, with 81% of senior executives expecting even better conditions over the next 12 months.

Michael Stevenson, Senior Partner, PricewaterhouseCoopers, Middle East Region said:

"The MENA region must be one of the most understated economies in the world. As an economic group, its GDP ranks tenth in the world; the region has one language and a population of 320 million. In recent years several world class companies have emerged and the growth potential of the region is attracting increasing attention from business leaders."

The regional results reveal striking differences from country to country. Oil still carries its weight: in the Gulf region Saudi Arabia clearly champions the tables with high confidence results among its CEOs and the recognition of the rest of the Arab CEOs for the potential of its domestic market. 72% of Saudi CEOs feel that conditions will be substantially better in 12 months compared to a 40% average in the remainder of the Gulf region.

More than 550 senior executives were questioned about business opportunity, obstacles to growth and predictions for the future of their companies. The second edition of the ABIR reveals that the region's industry leaders view the workforce as the single most decisive factor in the success or failure of their business. Most senior executives feel that the potential of their business for growth and competitiveness depends on improving the workforce.

Arab business leaders feel that to boost business growth, they need to address a lack of available talent in the region, and increased competition. These concerns have pushed ahead of last year's greatest threat, global terrorism.

Arab business leaders perceive as critical the quality of the domestic labor supply, which they see as being much lower than that of the international market. The high levels of recruitment from overseas are not economically sustainable, say the business leaders, and consequently it is imperative that the quality of domestic labor markets throughout the Arab world is elevated.

To achieve this, says the majority of Arab CEOs, the Arab world needs to focus on recruiting, training, developing and retaining home-grown talent. An overwhelming 92% of Arab business leaders now cite their top priority as raising education levels within the workforce, overtaking the improvement of infrastructure, their top priority of 2005. This need was especially strongly voiced by Saudi Arabian business leaders.

Khalid Malik, CEO, Moutamarat, said:

"This year's ABIR report has clearly reflected the need for Arab countries to be serious about education. To boost economic growth in the region, they need to focus on training and developing their workforce, and they need to do this quickly, or they will be left behind."

The strong concerns of Arab business leaders regarding human capital have prompted Moutamarat and PricewaterhouseCoopers to develop two new indices as part of the ABIR: the Domestic and International Labor Market Indices.