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Tuesday, 23 June 2020

Senior execs in MENA are optimistic about Egypt even as they brace for a sharp global slowdown

Senior execs in MENA are optimistic about Egypt even as they brace for a sharp global slowdown: Senior executives from the Middle East and North Africa are both uncertain and cautious about the effect of the covid-19 pandemic, with nearly three-quarters of respondents in a survey conducted by Ernst & Young (EY) expecting the covid-19 pandemic to have a severe impact on the global economy. Despite this, executives expect this impact to vary by region and as little as one quarter believe the pandemic will have a large impact on MENA. The survey was part of EY’s Global Capital Confidence Barometer (pdf).

There is relative optimism among Egypt-based execs, a third of whom don’t expect the pandemic to have a significant impact on the country. Only one-fifth anticipate economic activity to be heavily impacted.

Contrast this with Saudi Arabia and the UAE, where the outlook is darker: More than 80% of respondents expect the global economy to be severely impacted and more than one-third predict a deep local recession.

But we’re (so far) doing alright as a region: “One reason MENA countries initially may have felt financially insulated from the pandemic is that many companies in the region are well-capitalized and therefore believe they can operate longer before feeling the financial pinch,” says EY.

Outlook for M&A remains healthy: When the survey was conducted, many executives anticipated an immediate term slowdown in traditional M&A activity, However, the executives’ intention to pursue M&A until March 2021 is still high at 51%.

In Egypt, M&A intentions are at 49%, higher than the long-term regional average of 39%. Intentions for the UAE are also solid at 56%, with Saudi executives reporting reasonable appetite, but still down from last year’s survey.

A word of warning: Surveys have a shelf life — they’re a snapshot in time — and this one was conducted between 4 February and 26 March, when the outbreak in the MENA region was in relative infancy.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2020 Enterprise Ventures LLC.