Middle East Sees Boost in Economic Confidence in Q1 amid Slowdown in Global Economy

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The economy in the Middle East is expected to grow this year by around 3.5%, finds the latest Global Economic Conditions Survey (GECS) from ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants).

The quarterly monitor shows global economic confidence remains low in Q1 2019, despite rising for the first time in a year.  The global poll of 1,355 accountants shows that all key regions reported a bounce in confidence with Asia Pacific and the Middle East seeing the biggest gains.

Speaking of the results, head of ACCA Middle East, Fazeela Gopalani says:

‘While confidence was especially weak in our region at the end of last year, we’re seeing a really positive start to 2019 and in the first quarter confidence has rebounded abruptly.

‘This significant bounce has been helped along by the strong recovery in oil prices. It remains to be seen how sustainable the rise in oil prices is given the slowing global economy, which is likely to exert downward pressure on prices.

Supporting economic confidence further is the regulatory and fiscal landscape, especially in markets such as the UAE and KSA which continue to attract foreign direct investment and have recently seen an increase in international acquisition with the recent announcement by Uber who have acquired Careem which was established in the UAE.’

Hanadi Khalife, Director, MEA and India operations at IMA commented: “With the regional visions of KSA and the UAE now in their implementation phases, the Middle East economy is set to grow at a positive rate after a general slowdown. The report highlights that the rise in oil prices will accumulate increased revenue, which will in turn encourage infrastructural developments across the region. This increase in economic confidence will then pave the way for continued investments in key industries.”

For Q1 2019, the global orders index was virtually unchanged in the latest GECS.  This index held up better than confidence in recent quarters and underscores the message that GECS is pointing to slower global growth this year but not a major collapse.   

The GECS also revealed easing concerns about inflation with 48% of respondents expressing concern about rising costs, down from 52% in Q4 2018.  

Michael Taylor, chief economist at ACCA said of the global results: ‘Whilst the confidence index increased in Q1 2019 compared with Q4 2018, it remains at a fairly low level and consistent with a slowdown in growth. It should be recalled that confidence and activity indicators are all significantly lower than a year ago. But the orders index is little changed in Q1 compared with Q4 last year and suggests that the slowdown in growth will not be too severe this year.

‘Even before the increasing evidence of a growth slowdown emerged the inflation picture was generally benign. It has become even more so recently as demand has slowed.’

Taylor continued: ‘GECS shows a fall in concern about rising operating costs. This is the third quarterly fall in a row and reduces cost concerns to the lowest since Q2 2018.’