The economic view from the frontlines

The chairman of PricewaterhouseCoopers says the outlook for the region and the world is not as bad as some would suggest and the company has big plans to beat its rivals locally.

Dubai, 5th March 2012. Dennis Nally ( Chairman of PWC International ) at their headquarters in Emaar Square. ( Jeffrey E Biteng / The National )

Dennis Nally is chairman of the international accounting firm PricewaterhouseCoopers (PwC), which recently held the quarterly meeting of its "strategy council" in Dubai for the first time. Here he gives his views on the regional and global economic scene.

Why did you decide to bring the PwC gathering to the UAE?

I know the region pretty well, having travelled here a lot in recent months. But to get 21 of the senior leaders of the firm here gives them the opportunity to understand what's going on in a part of the world that's critical for us. We have big ambitions here. We want to be number one in this region over the next 12 months, which would mean overtaking Ernst & Young [a rival accounting firm]. The region is relatively small in terms of global GDP, but the potential opportunities, which is what interests the clients, make it a strategic part of the PwC network.

There have been big changes in the Middle East and North Africa recently. How do you interpret them?

There's been less fall-out from the Arab Spring than we expected. Just five years ago we would have seen a lot of companies pulling out of the region altogether with the levels of instability we've seen in the past year, but that hasn't happened. I think clients are now beginning to take the view that they have to accept more volatility than in the past. It's all part of the great global rebalancing act. If you're going to operate in emerging markets, you must expect and deal with the volatility.

What markets does PwC find attractive here?

All economies here have shown just how connected the region is, and how coming out of the financial crisis has demonstrated the need for greater competitiveness by business and governments. I think this has especially influenced how Saudi Arabia and the UAE are behaving. They realise they have to compete for growth and talent. We have big practices in both countries. I think there will be major changes in Saudi Arabia, and that will provide client opportunities there.

What are the challenges of doing business here?

In addition to the issue of political stability, there is great competition for talent, and a need for the infrastructure that goes with a modern competitive economy, in terms of medical an other facilities. I detect a greater willingness now to recognise that global standards should be the aim, instead of viewing things from a local standpoint. Local policymakers are genuinely looking at things like transparency, governance and quality of financial information from an international perspective.

What's your view of the international economic and financial scene, from the perspective of PwC clients?

Our annual global survey of chief executives showed that uncertainties are putting CEOs' confidence under pressure, but that businesses are not entirely on the defensive, especially with regard to emerging markets. Most CEOs were more confident of their own companies' prospects than they were for the global economy as a whole.

How do you explain that?

They've been through three difficult years now, and most have put in place mechanisms within their own companies to deal with foreseeable problems. But they have less confidence in the ability of governments and policymakers to deal with the big unknowns, like high deficits, low employment and risks to growth. Until they get more clarity, CEOs are going to be in a cautionary mindset to external factors. But why worry about things you can't control?

The US is still the most important economy. What's the view there?

We think things have got better over the past three months or so. The corporate performance has been fairly strong. There are still big issues out there like the deficit and unemployment, and until recently it seemed there was lots of debate but no action from political people. These issues will probably not be fully resolved until after the election in November, but there seems a better chance now that a strategy can be executed to deal with them.

And Europe?

It's not out of the woods yet, but it's so much better than it was two months ago. There has been more clarity from governments and that's what the business community wants. I believe most people, if they were thinking in straight economic terms, would not regard Greece as a sustainable economy. It obviously needs support and restructuring, but it's too early to pass judgement on the political issues of Greek euro-zone membership.

How do you think the your profession has emerged from the crisis?

It's important for accountants to step back and ask what lessons have been learned, and we welcome that debate. There is a gap between what we do and what the public expects, and that gap has got bigger in the past four years. To close it, we've got to get the issues on the table. If there is good regulation that can help us do that, we support it.