UAE mid-market firms must plan for inflation

Dubai - Businesses in the UAE must prepare for inflation – this can be done through agile budgeting, alternate routes of sourcing finance and diversification of suppliers

Companies in the UAE must start planning for rising costs in 2022 and 2023, said a senior corporate banking executive from Mashreq Bank.

“Inflation is a natural follow-up to any contraction or recession,” says Hind Eisa Salim, executive vice-president and head of services and manufacturing at Mashreq Bank. Factors including a surge in demand for goods, global supply chain disruptions, and rising energy prices are contributing to the risk of inflation globally.

“But, through better planning and precautionary measures built into their strategies for 2022, companies will be able to ride this wave out,” she said.

Salim emphasizes this approach for middle market companies and small and medium-sized enterprises (SMEs), who form the backbone of the UAE economy.

Middle-market companies tend to have limited sources of finance and lack the bargaining power necessary to pressure their suppliers to extend credit terms, when compared to large corporates. They also do not qualify for financial relief and buffers offered to SMEs by governments and banks.

She advises that mid-market companies need to prepare their budgets with more scrutiny, factoring in the rising cost of both inputs and funding.

“It is critical to remain agile and keep evaluating market trends,” she said .

business@khaleejtimes.com