UAE. [ME NewsWire] –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.
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, 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.’
She 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 here.
Photo Caption: Lindsay Degouve de Nuncques, head of ACCA Middle East
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