Business Confidence Rises in Saudi Arabia
Compared to other areas of the globe, business confidence was higher in the Middle East throughout the opening quarter of this year. The UAE and Saudi Arabia recorded the leading performances in the region, according to the latest Global Economic Conditions Survey conducted by the IMA (or Institute of Management Accountants) and ACCA (Association of Chartered Certified Accountants).
In late 2011 survey results indicated that 26 percent of respondents reported increased confidence levels. In this edition that figure was up to 32 percent.
In Saudi Arabia 42 percent of respondents reported high levels of confidence, while 38.5 percent of UAE respondents experienced gains in confidence.
Both nations are supported by sustainable and robust government spending, while Saudi Arabia experienced the leading levels of performance in investments and new orders.
Confidence in Egypt continued to decline after the political transition of 2011, according to survey results. In the previous survey 30 percent of Egyptian respondents recorded increases in confidence, while only 24 percent noted higher levels of confidence in the recent survey.
Perceptions have also reversed sharply, according to the findings in this recent survey.
In comparison with results from 2011’s last quarter, nearly twice as many respondents reported confidence gains (up from 16 to 29 percent) and almost a third less respondents reported a loss of business confidence (31 percent compared to 46 percent in Q4 2011). These results confirm that developed regions are experiencing substantial economic growth, although not robust at this time.
Almost twice the number of respondents noted that global economic recovery is occurring or about to occur, moving from 22 percent in the previous survey to 42 percent in recent results. The majority of respondents continue to believe that the global economy is experiencing stagnation or deterioration (54 percent), although that number is down from previous results of 73 percent.
On a global scale, survey results indicated that substantial recovery occurred during the opening months of this year as the global economy gained traction and became more dynamic.
On a smaller scale, almost twice the number of respondents as the last survey reported increased confidence in their own firms (29 percent in the recent survey, up from 16 percent in the previous survey). The survey tallied results from 2,200 accounting professionals across the globe.
Survey editor Emmanouil Schizas noted that scepticism often follows results such as these, with likely objections ticked off in the initial stages. A portion of the newfound optimism reverses in a short time as relief factors fade, although Schizas stated that much of the confidence is permanent.
Schizas said that gains in confidence levels remained consistent around the region and within different industries. Western Europe and the Americas reported the highest benefits for the early part of this year, as did distribution and manufacturing firms, especially those within high-tech markets.
Strong Growth Expected in the GCC for the Coming Year
Hydrocarbon-producing nations in the Gulf experienced about 4.6 percent growth on an annual basis from 2007 until last year. A leading Qatari bank noted that growth projections report continued robust growth for this year and next.
This 4.6 percent growth figure placed the GCC in the leading pack, with one of the quickest growing economies across the globe. Steady crude oil prices and substantial government spending resulted in this type of strong growth, according to a recent study covering the GCC region.
The report stated that healthy performance within the hydrocarbon sector impacted other sectors, as hydrocarbon revenue and earnings from by-products are spread around the GCC economy through government and private sector spending, as well as the financial system, creating surging growth in the entire economy.
GCC governments play an important role, since a majority of public revenue stems from hydrocarbon exports. Public spending averaged 33 percent of the regions GDP from 2007 to 2011.
This distribution created more activity in non-oil sectors, which saw a 6 percent real growth rate during the above period. According to the QNB Qatar is the only exception to dampened hydrocarbon growth, as the nation saw 15.2 percent growth in hydrocarbons from 2007 to 2011.
Qatar’s natural gas production grew by more than 100 percent, and the nation’s non-hydrocarbon sectors rose by 16 percent over 2007 to 2011, a growth rate more than double that of the next fastest growing economy in the GCC.
Qatar remains the third largest gas nation and, according to QNB, recorded the fastest economic growth in the GCC from 2007 to 2011.
QNB forecasts continued growth in the GCC for 2012 and 2013 as production levels stabilize in oil and gas. OPEC production targets will constrain growth, and increases to those targets are not likely to occur unless oil prices spike. Forecasted growth in oil production sits at 0.5 percent for 2012 and 2013, with gas output increasing quickly, forecasted at 4.9 percent per year from 2012 to 2013.
In economic terms, the oil and gas sector is expected to see real GDP expansion of 0.8 percent this year and next, while stronger growth is expected for the non-hydrocarbon sectors. This rapidly expanding economic sector will drive growth over the two year period. Public services are expected to lead this growth, with high oil revenues supporting government spending. Financial services will also play an important role in growth, taking advantage of increased economic activities and investments.
QNB expects oil prices to decline slightly in 2012, slowing down the real GDP growth rate in the Saudi Arabian, Kuwaiti and UAE economies.
Qatar has recorded a full year of producing natural gas at new capacities, which also spared the country from economic slowdown.
Oil production will also support growth in Oman, as targets rise and oil field development continues.
Bahrain is expected to witness steady growth, with greater reliance on stable sectors in the non-hydrocarbon industries such as services, according to reports.Paul Holdsworth, Staff Writer, Gulf Jobs Market News