Dubai, United Arab Emirates - Thursday, August 4th 2016 [ME NewsWire]
Latest quarterly global survey from ACCA and IMA shows oil price rise boosts business confidence across GCC.
Continued focus on diversification and closing budget deficits by governments across the region remain key.
However Brexit shock likely to offset fragile recovery in global business confidence in Q2 16/17.
The latest Global Economic Conditions Survey (GECS) from ACCA and IMA, suggested positive signs for businesses in the GCC but a stark forewarning of how the shock of Brexit will hit a fragile recovery in global business confidence.
Responding to the findings, Lindsay Degouve de Nuncques, head of ACCA Middle East said,
“It is encouraging to see that our members’ business confidence has improved across the Middle East. Our most recent results showed that business confidence in the UAE increased by 26 points, having hit a four-year low in the first quarter across the region.
Lindsay Degouve de Nuncques says that, although the region is still adapting to lower oil prices, the most recent survey results represent cause for cautious optimism:
This improvement in business confidence has no doubt been underpinned by the higher oil prices in Q2, but it is important to recognise that oil prices still remain well below their highs of a few years ago. A continued focus on diversification for the region therefore remains important. In addition continued government efforts to close the budget deficit are still required to the longer term economic stability of the region.”
Responses by firms in the Middle East reflected this reduction in capital spending, with 43% of firms in the Middle East reporting a fall in government support in Q2, above the global average of 34%. In addition most businesses believe this will continue, with 22% of them expecting a significant drop in government spending (compared with 19% globally).
However, Lindsay Degouve de Nuncques acknowledges that the prevailing mood globally is still far from bright
‘Although there has been a slight rise in confidence globally it is yet to translate into meaningful increases in capital expenditure and employment indices. Half of firms are still either cutting or freezing employment, while only 13% are increasing investment in staff. Only 16% of businesses reported they are increasing investment in capital projects, compared with 41% that said they are reducing it.’
Lindsay Degouve de Nuncques anticipates the potential impact of Brexit will be felt globally for the foreseeable future:
‘It would not be a surprise if global business sentiment fell again in Q3. And the potential for long-term uncertainty, as the UK negotiates its complex departure from the European Union, could weigh down on global confidence for some time to come.’
Fieldwork for the Q2 2016 GECS took place between 3 and 20 June, and attracted more than 1,200 responses from ACCA and IMA members around the world, including more than 130 CFOs. Nearly half the respondents were from small and medium enterprises, with the rest working for large firms of more than 250 employees.
The full report can be viewed and downloaded at:
Notes to Editors
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.
ACCA supports its 188,000 members and 480,000 students in 178 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 100 offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.
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David Bowden, ACCA Newsroom
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