Business confidence in the UAE and Saudi Arabia dipped ahead of the launch of VAT due to concerns over increased consumer costs, according to a new survey.
The survey of global CFOs and finance professionals conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA) found a challenging outlook for the Middle East region, but with opportunities for growth too.
Lindsay Degouve de Nuncques, head of ACCA Middle East, said: "At the moment confidence is lower in the UAE than usual, while confidence in Saudi Arabia is in negative territory.
"Both countries have adopted VAT this month, which may be causing some slight concerns around increased consumer costs this quarter. Once the initial implementation period has waved, we should see consumer confidence return and therefore a rise in sentiment.”
In the wider Middle East region, the survey showed that confidence is stable.
Hanadi Khalife, director, MEA & India Operations of IMA said: “There is a challenging and mixed outlook for the region, caused by the drop in oil revenues, fiscal austerity, higher inflation rates and continued political uncertainty.
"While these factors are likely to continue to weigh on the region’s prospects in 2018, governments in the UAE and Saudi have started taking measures to ease austerity and boost private sector activity in an effort to improve the business confidence outlook.”
Nuncques added: "Positively, there has been an improvement in government spending across UAE, which reflects its strong fiscal position compared with the rest of the region and the likelihood of its fiscal austerity easing slightly in 2018, along with an increasing non-oil dependent sector.”
Global economic confidence remained relatively high at the end of 2017 despite a slight dip in confidence from the previous quarter, the survey showed.
Fieldwork for the Q4 2017 survey took place between November 24 and December 11 and attracted 4,011 responses from CFOs.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.