Middle East employment freeze looms as economic confidence plummets

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UAE investment intention dipped and expectations of government spending tumbled, but the region is expected to do well in its tourism and logistics sectors with the preparations for the 2020 World Expo supporting construction.

The latest Global Economic Conditions Survey from ACCA and IMA, released today, found that more than half of firms are either cutting or freezing employment, while only 14% are increasing investment in staff. Responding to the findings, Faye Chua, ACCA head of business focus said:

 “Take North America out of the equation and the economic picture painted by this survey isn’t a pretty one. Emerging markets are besieged. Revenues for commodities firms have collapsed since mid-2014. And business confidence in China has fallen to its lowest level since our records began.

 “Almost half of businesses reported a drop in income in Q1. As a result, every region except North America saw a jump in the number of businesses cutting capital expenditure. With emerging economies continuing to struggle with low commodity prices and many businesses on a spending lock down, the outlook for the global economy is becoming increasingly gloomy.”

According to Faye Chua, it is the emerging markets suffering most from bottom lines being squeezed:

“Wages are rising rapidly in many parts of the world and businesses are finding it harder to cope as revenues come under increasing pressure. The sharp drop against the dollar experienced by many currencies will also have pushed up costs, making imports more expensive and raising the value of dollar-denominated debts. All this means that firms in emerging-market economies are very pessimistic about their prospects.”

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