Oil prices ‘pumped up region’s economic confidence’
MANAMA: Higher oil prices pumped up economic confidence in the Middle East in the third quarter this year, with growth momentum set to continue, the latest Global Economic Conditions Survey (GECS) showed.
Done jointly by the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA), the study is the largest economic survey of professional accountants around the world.
The GECS 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.
The latest survey found that 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.
The Middle East was the only region to record improved confidence in both the Q2 and Q3 surveys.
“Confidence in the Middle East region increased further in Q3 as the continued global recovery supported oil prices. The region includes some countries that have well-advanced vaccination rates. This, along with improved oil revenues, should support continued economic recovery,” said the report.
The Middle East orders index, the proxy for real economic activity, had the greatest increase of all GECS regions in this survey, moving above the pre-pandemic level of Q4-2019.
Commodity prices have rebounded strongly this year as global demand has recovered; oil prices were approaching $80 per barrel in early October, compared with a low of around $25 in 2020.
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. China’s economy has lost momentum in recent months, after steady growth earlier in the year. Nevertheless, economists polled believe growth should be sufficient for more economies to regain their pre-pandemic level of activity by the end of the year.
In other markets like South Asia, confidence levels have increased in Q3 to the highest level in over six years.
Moreover, the region also showed a rise in orders after a fall in the previous survey.
The improved outlook is due mainly to better prospects in India. Fieldwork for the Q3-2021 survey took place between August 31 and September 15, 2021 and attracted responses from 985 accountants, including CFOs.
avinash@gdn.com.bh
