Increased infrastructure spending could bode well for the UAE economy, finds the latest Q4 edition of Global Economic Conditions (GECS) from the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA).
The UAE GECS survey found overall economic confidence higher in Q4, recovering some of the ground lost in Q3.
Lindsay Degouve de Nuncques, head of ACCA Middle East, believes there is further optimism with the economy likely to perform relatively strongly over the next year or so, saying: “Volatility in oil prices may be a drag on the economy but strong fundamentals mean fiscal policy will not need to be tightened dramatically. In addition, the US dollar has lost upward momentum as interest rate expectations have fallen, limiting the degree of additional monetary tightening by the GCC economies.”
“In addition, increased spending on infrastructure projects, including for the World Expo in 2020, will underpin growth. Indeed, it is notable there was a sharp improvement in the government-spending sub-component, while the new orders sub-component was stable.”
Hanadi Khalife, Director, MEA and India operations at IMA commented: “The results of the survey show increasing business confidence in the Middle East which has been stimulated by UAE’s spending on its infrastructure. This falls in line with the objectives set by the government to achieve the UAE Vision 2021.”
“The real GDP growth is expected to accelerate in the UAE over the next few years, affected by the non-stop construction activities ahead of Expo 2020. Estimates show that infrastructure investments are playing a key role in driving the growth of the local economy that is increasingly relying on non-oil activities.”
The report shows that government spending is at a multi-year high and this is particularly focused on diversifying regional economies and driving sustainable economic development.”
Globally, economic confidence fell for the third consecutive quarter in Q4 2018, ending the year at an all-time low.
Speaking of the global results, Narayanan Vaidyanathan said: “Economic confidence over 2018 has been turbulent, with end of calendar year results downbeat compared to the start of 2018. It’s been interesting to look back at the GECS from the start of 2018, when we recorded economic confidence at its highest since the first survey was issued assessing Q1 2009. Last year was clearly a roller-coaster ride and the outlook for 2019 is also uncertain.”
The global poll of 3,800 accountants shows that all key regions recorded a negative confidence score with signs of growth weakening in the world’s three biggest economies – the US, China and the Eurozone The survey reveals respondents to be pessimistic about the outlook ahead, with the lowest scores recorded in Western Europe and the Caribbean. The least pessimistic part of the global economy was again South Asia, followed by Africa and North America.
GECS Q4 2018 can be found here:
https://www.accaglobal.com/gb/en/professional-insights/global-economics/gecs-q4-2018.html Fieldwork for the Q4 survey took place between 23 November and 7 December 2018 and attracted 3773 responses from ACCA and IMA members around the world, including 302 CFOs.