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Main » 2015 » November » 16 » Middle East Businesses Are Feeling the Strain, Says New Survey
8:21 AM Middle East Businesses Are Feeling the Strain, Says New Survey |
| Dubai, United Arab Emirates - Tuesday, November 10th 2015 [ME NewsWire]
Business confidence in the Middle East is at its lowest ebb for more than five years, according to the latest global survey of accountants.
The Global Economic Conditions Survey (GECS) carried out jointly by ACCA (The Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants) for the third quarter of 2015 suggests that the renewed fall in oil prices is likely to have concerned businesses, given the region’s dependence on energy exports. Capital expenditure plans have understandably been pared back. Businesses have also become much more downbeat about the ability of governments to continue propping up growth with fiscal stimulus.
The government spending expectations index for the region has never been lower. That said, the withdrawal of government support is likely to be gradual. Governments in the Middle East generally have large amounts of fiscal reserves and relatively little debt. It was notable that more respondents still expected government spending to increase over the next five years than expected it to decline.
One country where the outlook could be brightening is Egypt. As a net energy importer it is not as vulnerable to lower oil prices as other economies in the region. It will also receive a boost from the major extension of the Suez Canal and an increase in natural gas output, which will help resolve electricity shortages. Much, of course, will hinge on whether the country can avoid further bouts of social unrest.
Results from GECS show that, globally, finance professionals were more gloomy than at any time since 2011.
The survey, the largest regular survey of accountants around the world, which attracted 950 responses, showed that the emerging markets of the Asia Pacific region, in particular, have suffered the deepest slump. This follows concerns about the Chinese economy on which so many of them rely, along with a fresh fall in global commodity prices. More firms in the region are putting a freeze on recruitment and investment in staff is falling.
There is also less optimism among finance professionals in China itself –with business confidence there close to its lowest reading since GECS began.
The vast majority of firms are scaling back on investment, with 44% of respondents putting a freeze on recruitment or making job cuts. More than half of firms which were surveyed said that there were fewer profitable opportunities than six months earlier.
With the notable exception of China, expectations about government spending fell around the world in the third quarter.
The world’s other economic giant - the US- continues to cast a long shadow.
While the strength of the US dollar was undermining the competitiveness of US exporters, the decision to push back the start of its tightening cycle, possibly to next year, has given some respite to emerging market currencies at the start of the fourth quarter.
“This latest GECS report shows signs that the recovery in the U.S. could be faltering, with exports, manufacturing, and employment growth underperforming. While there was a dip in confidence, underlying economic conditions still look reasonably strong and improvement looks likely over the coming quarters,” said Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy.
Western Europe remains more robust in terms of confidence, with the European Central Bank’s quantitative easing programme driving a recovery in bank lending across the region.
There is also a view that the Greek crisis is over for the time being, along with a belief that the euro-zone as a whole is better placed to cope with the fallout of a ‘Grexit’, should it happen.
The positive news is that some improvement in global business confidence looks likely in the last quarter of the year, with business conditions continuing to improve. But as the report warns, there is no shortage of potential threats to the global recovery.
Faye Chua, Head of Business Insights with ACCA said: “ Finance professionals around the world cannot help but to have been affected by the combination of poor data, financial turmoil, falling commodity prices, along with concerns over the two leading economies of the US and China during this quarter. While the global economy is currently built on volatile ground, there are some causes for optimism – with forecasters expecting a rise in global growth next year. But finance professionals will still need to be prepared to steer companies of all sizes through some difficult issues, given how quickly storms have developed in the global markets during recent weeks.”
Access the full report here:
http://www.accaglobal.com/gb/en/technical-activities/browse-resources/gecsr-update.html
Notes to Editors
About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.
ACCA supports its 178,000 members and 455,000 students in 181 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 95 offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.
More information is here: www.accaglobal.com
About IMA® (Institute of Management Accountants) IMA®, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) program, continuing education, networking and advocacy of the highest ethical business practices. IMA has a global network of more than 75,000 members in 140 countries and 300 professional and student chapters. Headquartered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe, and Middle East/Africa. For more information about IMA, please visit www.imanet.org.
Contacts
Colin Davis, ACCA Newsroom
tel: +44 (0)20 7059 5738
mob: + 44 (0)7720 347 713
colin.davis@accaglobal.com
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