Business counts the cost of Arab Spring

21 June 2011

Six months on from the start of the Arab Spring, businesses around the world are counting the cost of unrest in the Middle East and North Africa.

The latest research from Grant Thornton’s International Business Report (IBR) reveals that as the region continues to experience major political change, globally, more than a fifth (22%) of privately owned companies say that the unrest has had a negative impact on their business. This figure is highest in North America where a quarter (26%) of businesses report a negative impact. However, when asked if the situation is affecting their plans to do business in the region, only 10% globally said they are now less likely to do business there. Grant Thornton believes that, despite the upheaval, the region should be viewed by businesses as one with real opportunities for the future.

Arab Spring

Ed Nusbaum, CEO of Grant Thornton International, said: “The response of businesses in North America to the Arab Spring typifies what we have seen right around the world. Understandably, the unrest has had a significant negative effect and for those businesses with strong links to the region, this will have been particularly acute. Possible contagion of the unrest, and concerns over the rising cost of oil, have done little to aid an already stuttering global economic recovery. And with the situation in Yemen and Syria appearing to intensify, it is likely that businesses will be counting the cost for a little while to come.

“Businesses over the first half of this year have had a number of issues to deal with as a result of the Arab Spring. Fuel prices have increased, pushing up operations and production costs. There is also the direct effect on order books that businesses will have felt as supply routes between these countries are disrupted, with governments in the region focusing on political issues rather than trade. Turkey, for example, has been hit hard, with 53% of business saying they have felt a negative impact - undoubtedly due to the Middle East being a key export region for them.

“Despite these immediate impacts, however, the long-term outlook still holds much promise. The overwhelming majority of businesses do not see the current unrest as a future hindrance to growing or investing in the Middle East and North Africa. As the region continues to open up to outside investment, it will become central to the long-term growth prospects of the global economy and should be seen by businesses as an area of real opportunity. It is certainly a region which Grant Thornton will be monitoring closely over the next couple of years."

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