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Middle East tops business confidence index, but caution is urged

United Arab Emirates: Saturday, May 04 - 2013 @ 10:31

The Global Economic Conditions Survey from ACCA (the Association of Chartered Certified Accountants) and the Institute of Management Accountants (IMA), which gauges the views of finance professionals across the world, revealed that the Middle East topped the world-wide business confidence index table in the first quarter of 2013.

The global survey of 2000 finance professionals working in businesses of all sizes showed that in the region 34% said they were more confident about the prospects of their organisations, up 4.5% compared to Q4 2012.

Emmanouil Schizas, Senior Economic Analyst at ACCA, said: Globally, finance teams, who have their fingers on the pulse of business, have reported glimmers of hope for the future. The Middle East has registered a much stronger confidence score at the start of this year than other global regions. Our findings show it is leading the global economy.

“Cash-flow and demand pressures eased sharply, falling to a very low level by the standards of recent quarters. Moreover, growth capital has become much more accessible and investment opportunities have increased substantially following a dip in the second half of 2012.

“However, we shouldn’t start celebrating yet. FX volatility and inflation have grown over the last six months and are generally on an upward trajectory. More importantly, business opportunities have dwindled following what appears to have been a one-off surge in Q4 2012, to roughly the same level as one year ago. As a result, despite an improving investment environment, capacity building by businesses has slowed both in the last quarter and year on year.”

Stuart Dunlop, ACCA Regional Director, MENASA, said: “The UAE has emerged as the most confident among the better-represented ACCA and IMA markets. Access to growth capital improved strongly for the fourth quarter on the trot, but because of dwindling opportunities too much capital may soon be chasing too few opportunities.

“Businesses may have strong incentives not to retain earnings as survey respondents reported growing levels of external investment opportunities.”

The global outlook

The survey found that globally, nearly one quarter (24%) of respondents reported they were more confident about the prospects of their organisations than three months earlier, up from 19% in late 2012, while 37% reported a loss of confidence, down from 43%. The highest confidence levels were in the Middle East.

Over two fifths (43%) of respondents in early 2013 believed the global economy was improving or about to do so, up from 30% in the previous quarter, while just over half (54%) expected deterioration or stagnation, down from 65% in late 2012.

ACCA’s Emmanouil Schizas said: “The global confidence gains recorded in Q1 2013 are much larger than what would be expected given the conditions on the ground. It seems confidence is being fuelled by an expectation of economic improvement in the future, but it’s not clear, when looking at the fundamentals, where this is meant to come from. As a result, we believe this surge in confidence is likely to be short-lived.”

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Saturday, May 4- 2013 @ 10:31 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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