New global survey shows firms are reinvesting earnings, showing increased dynamism
Businesses in the UAE are reinvesting earnings and showing increased dynamism in the second quarter of 2013 despite tighter demand and cash-flow conditions, according to new findings from a global survey.
The Global Economic Conditions Survey (GECS) from ACCA (the Association of Chartered Certified Accountants) and the Institute of Management Accountants (IMA) showed that 40 percent of UAE firms reported increased confidence.
This was up from 33 percent in the previous quarter while only 18 per cent reported a loss of confidence.
Susie Isaacson, ACCA head of UAE, said: "UAE finance teams are looking at the numbers and telling us that the businesses they work for are demonstrating greater dynamism and funding is going more into organic growth.
"The knock on effect is a boost to capacity building - investment in both capital and employees - for the businesses in UAE. Better access to growth capital is adding to these trends, which are reflected in the high confidence levels of the business community.
"Respondents in the UAE have traditionally expected government spending to rise substantially in the medium-term, but are now beginning to revise their expectations further upwards. A loosening of fiscal policy in the medium term is bound to have an impact on confidence and economic performance."
Despite rising confidence, faith in the global recovery has fallen marginally, even though it's still higher in the UAE than any other major ACCA or IMA market, the survey showed.
More than two thirds (68 percent) of the UAE sample said they are optimistic about the recovery, down from 70 percent in Q1 2013.
The GECS showed a different story across the wider Middle East region, with business confidence taking a hit, despite a rise in business capacity and improving access to growth capital.
One third of Middle-East-based respondents taking part in the survey reported a loss of confidence in the prospects of their organisations, due mostly to rising cash-flow and demand pressures.
However, faith in the global economic recovery has never been stronger in the last 18 months, with 59 percent of finance professionals in Middle East sample reporting a more positive outlook.
Globally, the GECS found both business confidence and optimism about the economy continued to rise during the second quarter of the year.
Nearly half of the GECS sample (47 percent) felt that the state of the economy was improving or about to do so, up from 43 percent in early 2013, while just under 50 percent were pessimistic, predicting deterioration or stagnation, down from 54 percent in the first quarter.
This is the highest level of optimism about the national and global economies in two years, and the strongest year-on-year improvement in three years.
GECS is the largest quarterly economic survey of accountants in the world, gauging the views of ACCA and IMA finance professionals working at the coal face of businesses.