Middle East economic confidence index dips in Q2 2019 finds latest economic research from ACCA and IMA

Dubai, United Arab Emirates, -Tuesday 23 July 2019 [ AETOS Wire ]

Volatile oil prices have dented economic confidence in the Middle East, according to the Q2 analysis from the latest Global Economic Conditions Survey (GECS) from ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants).

The global poll of 1162 accountants shows that confidence remains above the record low reached at the end of 2018, consistent with a modest global economic slowdown.

The GECS confidence index in the Middle East fell slightly in Q2, but it remains well above the levels recorded through the second half of 2018 when the oil price fell sharply, and higher US interest rates had an impact.

Fazeela Gopalani, Head of ACCA Middle East, said: ‘It’s clear our economy is not immune from global pressures and influences. The US and China trade war has had an impact on the global stage, while reduced global demand for oil is a downside risk for oil producers. For the Middle East, the prospect of lower US interest rates is a move that would allow many countries in the region to ease their own monetary policy, and so that is a cause for optimism.’

Looking globally, the Middle East compares more favourably to the US and China, which have  revealed high levels of uncertainty, with the US results showing a sharp fall in confidence to the lowest level in eight years, largely due to trade tensions as tariffs were increased to 25% on a range of Chinese imports. Confidence in the UK economy also fell back from Q1 but not to the low levels of Q4 2018.

The message from the GECS continues to be moderate growth, restrained especially by stagnant business investment spending, hampered by Brexit uncertainty UK growth this year is on course to be around 1%, while the prospects for next year depend heavily on the Brexit outcome.

Fazeela Gopalani concludes: ‘The GECS points to a slowing global economy with significant downside risks reflected in weak confidence. The biggest risk to the global economy remains a significant further escalation in the US-China trade war. A sharp slowdown in China and a no deal Brexit in the UK are also downside risks we need to consider.’

Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy stated: ‘The US economy is slowing and uncertainty is high as shown in the latest GECS with elevated trade tensions a major factor. But the Federal Reserve is very likely to cut interest rates later this month, helping to sustain the economic expansion, which has now lasted uninterrupted for 10 years.’

GECS concludes with a view of the outlook for global growth, which this year remains a slowdown to between 3% and 3.5% from 3.8% last year. The good news is that persistent sub-target inflation, notably in the US and euro area, gives central banks the opportunity to ease monetary policy.

The full GECS Q2 2019 is here: https://www.accaglobal.com/gb/en/professional-insights/global-economics/gecs-report-q2-2019.html

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering 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 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide and 328 approved learning providers who provide high standards of 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.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here: www.accaglobal.com

About IMA® (Institute of Management Accountants)

IMA®, named 2017 and 2018 Professional Body of the Year by The Accountant/International Accounting Bulletin, 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 100,000 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/India. For more information about IMA, please visit www.imanet.org.

Separate page on all key findings show:

North America : Growth in the US in the first quarter was surprisingly strong at an annualised rate of 3.2%, faster than in Q4 last year.  The US GECS findings in Q2 showed a very sharp drop in confidence, to a record low. A fall in confidence, if not on this scale, was to be expected. This is because the quarter witnessed a resurgence of trade tensions, primarily between the US and China, which had abated in the first quarter.

Asia Pacific: Confidence in the Asia Pacific region fell in Q2, to the lowest level in a year. Increased perceived risk around the US–China trade dispute was almost certainly a factor in this.

Western Europe: The euro-zone economy continues to struggle with weak growth and below target inflation. A big factor in this slowdown is Germany where its export-driven growth model is under pressure from weaker global trade and especially weak demand from China and global issues restraining Germany’s car industry.

The UK: The seven-month extension to 31st October of the Article 50 deadline for leaving the EU has increased the impact of Brexit uncertainty on the economy. This uncertainty is having a negative influence on business confidence and the UK GECS confidence measure fell back in Q2, as did the orders balance. Both confidence and orders are consistent with below-trend growth into the second half of the year.

Middle East: The GECS confidence index in the region fell slightly in Q2. But it remains well above the levels recorded through the second half of 2018 when the oil price fell sharply and US interest rates were on an upward trajectory. Most of the components of the regional index are slightly below their long run average in Q2.  This is consistent with growth in the region of around 1.5% to 2% this year.  There are mixed results from government spending measures as some economies make greater efforts to boost the non-oil sectors of their economies, e/.g UAE, Qatar and Saudi Arabia. 

South Asia: The South Asia region in the GECS is one of the most optimistic in the latest survey. India and Pakistan are the dominant countries in the region and both are facing economic challenges. Revised data show the Indian economy losing momentum over the last year, led by manufacturing and agriculture.

Meanwhile Pakistan’s economy is slowing as it grapples with twin current account and fiscal deficits.


In Q2 2019 the GECS confidence index for Africa improved, one of the few regions to see a rise in the quarter. The prospect of lower US interest rates is a positive since it eases the pressure for capital outflows from the continent.


Chanel Townsend

E: chanel.townsend@accaglobal.com

T: +44 (0)20 7059 5622

M: +44 (0)7834173867
Twitter @ACCANews

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