• ACCA and Institute of Management Accounting reveal the latest The Global Economic Conditions Survey report
• Middle East region witnesses subdued growth in economic confidence due to macroeconomic factors
The latest Global Economic Conditions Survey (GECS) launched by ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) witnessed a general slowdown in global economic confidence in the third quarter of 2018, its lowest since the beginning of 2016.
According to the survey, South Asia was the most confident part of the global economy, overtaking North America, where confidence was lower than previous years. The Middle East and Asia Pacific were next in line as confidence remained subdued with the region now at the bottom of its cycle since the survey begun.
‘Economies in the Middle East have previously benefited from rising oil prices, which up until recently were trading below $50 per barrel,’ says Lindsay Degouve de Nuncques, Head of ACCA Middle East. ‘However despite this, we have witnessed slower growth projections for sectors such as real estate and construction which is a key sector for countries like the UAE. This has resulted in sentiment declining, coupled with the currency being pegged to the US dollar – the rise of which would have dented competitiveness of non-oil exports from the region.
Lindsay Head of ACCA Middle East (Photo - AETOSWire)
‘We would anticipate an increase in sentiment as we head into the next quarter, particularly given the recent announcement by the UAE cabinet who approved a three-year budget worth $49bn with no deficit, with 59 percent going towards education and social development. Similarly, Saudi Arabia plans to eliminate budget deficit by 2023 with neighbouring Bahrain to introduce VAT from 1 January 2019 – all of which should result in further economic stability across the region.’
Hanadi Khalife, Director, MEA & India Operations, Institute of Management Accountants commented that “Confidence in the Middle East has slowed down in the third quarter of the year due to several macroeconomic factors such as the geo strategic location of the region coupled with the fluctuation in oil prices. We anticipate that the results will change as governments in the Middle East region, are focusing on diversifying their economies by investing heavily in driving innovation, new technology and creating job opportunities for current and future generations.”
Commenting on the global outlook Narayanan Vaidyanathan, Head of Business Insights at ACCA states ‘the world economy this year is on course for its strongest performance in seven years, boosted by a buoyant US. Momentum going into 2019 will be positive but there are headwinds that will slow the pace of expansion as the year progresses. In the US the boost from tax cuts will fade and interest rates are likely to continue their gradual rise.
‘In China, growth is slowing down mainly as a result of recent monetary policy tightening introduced to slow credit growth. But the authorities may ease policy to support growth if trade tensions with the US escalate early next year. Policymakers appear to be finally recognizing recent rates of credit growth are unsustainable and a period of weaker economic growth is a price worth paying for a more secure financial system.
‘Prospects for the Eurozone remain positive; falling unemployment levels in many Eurozone countries is leading to higher wages, which is helping to support consumer spending., Meanwhile in the UK the economy is holding up well but Brexit uncertainty is extreme with less than six months before the due date for leaving the EU.’
Tag: Blog , Information , General Slowdown Witnessed In Economic Confidence , Middle East