The Middle East has become the highest-scoring region in terms of confidence and orders in the first quarter (Q1) of 2022, despite concerns over rising operating costs, according to the Global Economic Conditions Survey (GECS) jointly conducted by the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA).

The GECS’s index of concern around operating costs grew by 9 percentage points (pp) in Q1 2022, marking its highest recorded level at 62%.

This sharp growth over the past 12 months reflects the impacts of higher energy and transport costs resulting from volatile supply chain.

Meanwhile, the Middle East’s GECS confidence index increased by 25% during the period between Q4 2021 and Q1 2022m backed by the dramatic raise in oil prices since the beginning of 2022.

The jump in the confidence index during Q1 2022 shows that the “Omicron effect” has almost faded away.

Regarding the global indices, the confidence index rose by 4 points to +9, while the orders index was up by 2 points to -3 in Q1 2022.

Both indices have dropped from the remarkably high levels recorded in 2020, however, they still remain above pre-pandemic levels.

“The start of the year has seen a steep increase in the price of oil, gas, wheat, and other commodities, propelling inflation to even greater heights, squeezing real incomes, and slowing economic growth. Compared with previous forecasts, global growth may be reduced by as much as one percentage point this year, to around 3.25%,” ACCA’s Chief Economist Michael Taylor commented.

Michael Taylor concluded: ‘Central banks in advanced economies face a difficult judgment call that could result either in overly-tight policies that may lead to a recession or excessively lenient policies embedding inflation and inflation expectations. Policies need to be thought through and stress-tested very carefully in the days, weeks, and months ahead.’

It is worth noting that the GECS survey for Q4 2022 showed that the economic confidence index in the Middle East continued its high level following the robust recovery in oil prices in 2021.

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