Economic Confidence in GCC Remains Stable despite VAT Adoption

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Confidence in the Middle East is stable, even with the adoption of VAT in the GCC, according to the latest edition of the Global Economic Conditions Survey (GECS) released today.

The quarterly survey of global CFOs and finance professionals, conducted by ACCA (the Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants), found a challenging outlook for the region, but with opportunities for growth too.

Hanadi Khalife, Director, MEA & India Operations of IMA said, “There is a challenging and mixed outlook for the region, caused by the drop in oil revenues, fiscal austerity, higher inflation rates and continued political uncertainty. While these factors are likely to continue to weigh on the region’s prospects in 2018,governments in the UAE and Saudi have started taking measures to ease austerity and boost private sector activity in an effort to improve the business confidence outlook.”

Lindsay Degouve de Nuncques, Head of ACCA Middle East adds “At the moment confidence is lower in the UAE than usual, whilst confidence in Saudi Arabia is in negative territory. Both countries have adopted VAT this month, which may be causing some slight concerns around increased consumer costs this quarter, as reported. Once the initial implementation period has waved, we should see consumer confidence return and therefore a rise in sentiment.”

Positively, there has been an improvement in government spending across UAE, which reflects its strong fiscal position compared with the rest of the region and the likelihood of its fiscal austerity easing slightly in 2018, along with an increasing non-oil dependent sector” continues Lindsay.

Global economic confidence remained relatively high at the end of 2017 despite a slight dip in confidence from the previous quarter. Narayanan Vaidyanathan, head of business insights at ACCA says,

‘Despite a small dip, the relatively high level of confidence reflects a stronger economic outlook in the US and India. The overall outlook for 2018 is a promising one in terms of global economic growth and confidence. Some of the signs of a global economic recovery in 2017 look set to continue, with improvements for developed and emerging markets.’

Fieldwork for the Q4 2017 GECS took place between 24 November and 11 December 2017 and attracted 4,011 responses from ACCA and IMA members around the world, including more than 250 CFOs.

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