There is a recurrent theme emerging when discussing companies’ expectations for the UAE market in 2018.

Senior executives across many sectors face the same challenge. Their shareholders are looking for revenue and profit growth at a time when demand is softening and there is too much supply.

These broad market dynamics mean that the organic growth achieved of the past is no longer possible. Instead, attentions are turning to inorganic growth, and that means consolidation with mergers and acquisitions (M&A).

Deals this year have already started. In January, Dubai-based and London-listed NMC Health acquired controlling stakes in two GCC-based healthcare operators for a combined investment of $207m. It also purchased a 70 per cent stake in UAE-based cosmetic surgery provider CosmeSurge from Emirates Healthcare Group for $170m, and outside the UAE, an 80 per cent stake in Saudi Arabia’s Al-Salam Medical Group for $37m.

Healthcare is not the only example and M&A activity is expected in other sectors ranging from industry, engineering, banking, financial services, retail and hospitality. For many the motive for merging or acquiring is growth, while for others scaling up could be a defensive move to fight off either competition or a takeover from other players.

As the private sector starts to consolidate it will follow in the footsteps of the public sector. Since 2014, government entities have restructured their operations to reduce costs and improve efficiencies as lower oil prices tighten state budgets.

Abu Dhabi has been the most active when it comes to consolidation with Mubadala merging with IPIC, Abu Dhabi National Oil Company (Adnoc) consolidating its operating companies under one umbrella, and First Gulf Bank merging with National Bank of Abu Dhabi to form First Abu Dhabi Bank.

As the private sector consolidates, the regional economy will move closer to reaching an equilibrium for this new era of lower oil prices and more subdued demand growth.