UAE firms seriously hit by COVID-19; HSBC Survey

Many UAE companies are facing challenges caused by the coronavirus pandemic, and are expected to make certain operational changes to overcome the impact of the crisis.

In a recent HSBC survey covering more than 2,600 organizations in 14 nations, 79% of the country ‘s companies said COVID-19 had “strongly impacted” them. Only a small proportion of UAE companies (18%) said they were resilient enough to withstand the financial impact.

“The UAE was the second-highest market, after India, feeling the impact very strongly,” HSBC said.

The virus that was first discovered and spread worldwide from Wuhan, China, infecting more than 14 million people, decimated business incomes and resulted in millions of job losses.

IMF (International Monetary Fund) had lowered the global growth forecast for the year to nearly 5% in June which is worse than its forecast in April.

Even as the global situation seems grim due to the virus continuing to rage across the world, the HSBC report brings a glimmer of hope.

Only 1% out of the total 100 firms that participated in the study felt that their long term survival is threatened while 51% of them expressed that though a few adjustments may be required, they felt ‘strong overall.’

“There is a sense of optimism and entrepreneurialism which I think helps drive the country forward, as well as the support of the fiscal regime to encourage that growth. The UAE is [also] a very important source of foreign direct investment (FDI). There’s a lot of support from the United States, China and Singapore for FDI inflows that are going to continue to help the UAE going forward,” Daniel Howlett, HSBC’s regional head of commercial banking for Middle East, North Africa and Turkey (MENAT), said in a media briefing.

This year’s HSBC survey was conducted between April 28 and May 12, and included SMEs. The survey covered companies in Canada, Mexico, the United States, Australia, Hong Kong, India, Indonesia, Mainland China, Malaysia, Singapore, France, Germany and the UK.

72% of them said that over the next two years they planned to increase measures that can ensure the security of their supply chains.

32% of them, which constitutes at least a third of all the businesses in the UAE will consider reviewing their supply chain partners while 30% of them may diversify their suppliers so they can work with more providers.

Investment in technology to improve the quality of work is being considered by a major share of the businesses (64%), while 95% agreed on the need to reassess their operations to be built on firmer environmental foundations.