Economic confidence in Middle East further improves over rising oil prices

Global confidence index falls; Middle East is only region to record improvement in 2 quarters

  
Image used for illustrative purpose. Energy crisis with stock market on screen.

Image used for illustrative purpose. Energy crisis with stock market on screen.

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Economic confidence in the Middle East improved further in the third quarter of the year on the back of higher oil prices, a new survey showed.  

The region’s confidence index surged past the 40-point mark in Q3 2021, moving above pre-pandemic levels and the highest since Q3 2012, according to the Global Economic Conditions Survey (GECS) by ACCA and IMA. 

“The Middle East is the only region to record improved confidence in both the Q2 and Q3 surveys…The region includes some countries that have well-advanced vaccination rates. This, along with improved oil revenues, should support continued economic recovery,” the report said. 

The study, carried jointly by the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA), is the largest regular economic survey of professional accountants around the world. 

It features indices, such as capital expenditure and employment, providing insights into the economic activity in the markets covered, as well as views of finance professionals on key variables, such as investment, labour and costs. 

CONFIDENCE INDEX, OTHER INDICES FOR MIDDLE EAST 

Fieldwork for the Q3 2021 survey took place between August 31 and September 15, 2021 and attracted responses from close to 1,000 accountants, including CFOs. 

Global results 

Overall, the global confidence index fell by nine points in the third quarter, pointing to an easing in the pace of global economic growth towards the turn of the year. Optimism levels dropped due to several factors, including the prevalence of Delta variant infections. 

The global confidence index was also dragged down in particular by falls in confidence in certain regions like North America and Western Europe, which recorded falls of -41 and -24 points, respectively. 

“Despite high vaccination rates in many developed countries, the prevalence of the Delta variant of COVID-19 is resulting in a degree of caution that is affecting confidence,” the report said. 

In other markets like Asia Pacific and South Asia, confidence levels have increased compared to the previous quarter. 

“Economic prospects in developed economies remain brighter than in emerging markets, where low vaccination rates continue to prevent a full-scale economic recovery,” the GECS report said. 

However, concerns about operating costs are now at their highest level since the start of 2019, increasing five points globally in the third quarter. This is driven by higher transport and commodities costs. 

“The [study] points to an easing in the pace of global economic growth towards the turn of the year,” said Loreal Jiles, Vice President of Research and Thought Leadership at IMA. 

“After exceptionally strong growth in the first half of the year, there are signs of a moderation in growth as year-end approaches. Continued prevalence of COVID-19 infections, especially of the Delta variant, is in some cases, undermining confidence.” 

(Writing by Cleofe Maceda; editing by Seban Scaria) 

Cleofe.maceda@refinitiv.com 

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© ZAWYA 2021

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