UAE's top dogs in finance are optimistic for their economy
The global economic recovery has slowed down again in early 2012, according to a worldwide survey of finance professionals who fear that governments which are already living beyond their means may struggle to get it back on track through extra public spending.
The Global Economic Conditions Survey (GECS) for the second quarter of 2012, undertaken by ACCA (the Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants), cautioned that growth across the world's most developed economies has stalled once again and that the global economy is as fragile as it has ever been in the last three years.
The global survey of 2,700 professional accountants, now well into its third year, suggests that hints of a stronger recovery in early 2012 were mostly down to misplaced optimism, and that most of the gains made at the time have since been reversed.
Among the markets that were well-represented in the ACCA/IMA sample, the UAE remained the most confident, with 35 per cent of respondents reporting confidence gains (down from 42 per cent) against 27 per cent reporting losses (up from 23 per cent). While the overall loss of momentum is consistent with global trends, it is worth noting than only the UAE recorded net confidence gains in the second quarter of 2012. Not surprisingly, positive attitudes towards the global economy are also more resilient in the UAE than elsewhere, with 46 per cent of respondents thinking the recovery is on track, down from 53 per cent.
Cash flow pressures appear to have eased significantly in the Emirates over the last three months, with fewer professionals worrying about the survival of their suppliers or customers, and incidences of late payment are down as well. Importantly, new orders appear to be on the rise.
However, all is not well: respondents reported a surge in input prices and significant exchange rate fluctuations in the second quarter, mostly due to the AED's dollar peg and expectations of a further round of quantitative easing in the States. Respondents also reported a slowdown in the labour market, with employers apparently preferring to invest more in their existing staff, and also saw a diminishing number of value-added opportunities available to their organisations.
China's slowing economy has dominated the survey findings this quarter, although ACCA and IMA stress that there are few signs of the hard landing many commentators had feared. That said, both confidence and investment are falling despite increasing business opportunities. Survey editor Manos Schizas, Senior Economic Analyst with ACCA said: "The point now is to see how far and how fast the Chinese slowdown will travel. Our members in Africa tend to feel any fallout from Asia fairly quickly, and there could be implications for other markets which trade with China."
According to the survey, the flip side of the Chinese slowdown is a recovery for the US economy, where investment is on the rise and confidence is high, despite significant potential problems.
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