Business confidence across the Middle East has fallen to its lowest level since the first quarter of 2016, according to the latest Global Economic Conditions Survey (GECS).
Commenting on the results, Lindsay Degouve de Nuncques, head of ACCA Middle East, said: “In the UAE specifically, the capital expenditure and employment subcomponents were both very weak. Despite the UAE having one of the biggest non-oil sectors in the Gulf, this will be related to the lower oil price.”
“Oil output is likely to remain subdued as countries in the Middle East follow the latest Opec production cuts. The other drag is likely to come from continued fiscal austerity, as the region continues its adjustment to a period of lower oil prices.”
“If oil prices remain relatively stable, the UAE’s confidence levels may start to recover in the coming months. Our fiscal position is relatively strong, and it is significant that the government expenditure sub-component remains in positive territory. Preparations for the 2020 World Expo should also help to support the UAE’s economic prospects,” she added.
On the other hand, global economic confidence improved slightly in the third quarter, and remains high compared with the past couple of years.
“This quarter’s study suggests that the global economy is enjoying a strong recovery. While the global picture is optimistic, however, it does hide variations, with some regions doing much better than others,” said Narayanan Vaidyanathan, senior business analyst at ACCA.
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South Asia was the most confident region in this quarter’s study, with the region’s two biggest economies, India and Pakistan, set to grow strongly over the next year.
The study paints a different picture in the US, where business confidence has fallen for the second consecutive quarter.
Canada, on the other hand, has been the most optimistic part of the North America and Caribbean region over the last quarter, the study shows.