Intensive commodity price shocks, ongoing high inflation, and increased cost of living are causing concern for businesses in the UAE.
A recent report by the World Economic Forum (WEF), in collaboration with Marsh McLennon, listed the problems as the three greatest immediate critical threats to the UAE’s business continuity and economic growth.
Geopolitical competition for resources, geoeconomic conflict, and the failure of cybersecurity measures was also mentioned by survey participants from the UAE as major threats that are expected to represent the greatest threat to the nation during the next two years.
According to the WEF research, firms in the UAE face “quite significant risks” due to a protracted cost-of-living problem, which includes rising wages, spiraling supply chain costs, and a decline in consumer purchasing power.
Businesses worry about the effects of persistently high inflation, a decline in public sector investment, shortages of public goods, and a lack of human capital.
To address the concerns, the WEF report urged UAE businesses to adopt a range of mitigation measures, including:
Greater awareness of the impact that geopolitical frictions may have on economics, market advantages and rising costs.
Protect against reputational and legal risks by incorporating ESG and climate frameworks.
Limit reputational, operational and legal risks by preparing for data breaches and cyberattacks.
Mitigate workforce risks in light of inflationary pressures on healthcare and basic needs.
Invest in holistic resilience frameworks to anticipate future crises and improve capacity to deal with shocks.
Meanwhile, according to a separate study, the growth of the UAE’s non-oil private sector declined for a second straight month in December as concerns about the global economy dampened investor confidence.
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