Increased infrastructure spending could bode well for the UAE economy, according to the latest edition of a global survey of accountants.
The survey from the Association of Chartered Certified Accountants and Institute of Management Accountants showed that overall economic confidence in the UAE rose during the fourth quarter of 2018 compared to the previous three months.
Lindsay Degouve de Nuncques, head of ACCA Middle East, said there is optimism that the UAE economy is likely to perform relatively strongly over the next year or so.
She added: “Volatility in oil prices may be a drag on the economy but strong fundamentals mean fiscal policy will not need to be tightened dramatically. In addition, the US dollar has lost upward momentum as interest rate expectations have fallen, limiting the degree of additional monetary tightening by the GCC economies.
“In addition, increased spending on infrastructure projects, including for the World Expo in 2020, will underpin growth. Indeed, it is notable there was a sharp improvement in the government-spending sub-component, while the new orders sub-component was stable.”
She said that in Saudi Arabia, a major factor affecting the economy is the recent OPEC oil production cuts. "The recent fall in oil prices is likely to lead to a decline in government revenues, and government spending may come under pressure as a result,” she added.
Hanadi Khalife, director, MEA and India operations at IMA noted: “The results of the survey show increasing business confidence in the Middle East which has been stimulated by UAE’s spending on its infrastructure. This falls in line with the objectives set by the government to achieve the UAE Vision 2021.
“The real GDP growth is expected to accelerate in the UAE over the next few years, affected by the non-stop construction activities ahead of Expo 2020. Estimates show that infrastructure investments are playing a key role in driving the growth of the local economy that is increasingly relying on non-oil activities.”
Globally, economic confidence fell for the third consecutive quarter in Q4 2018, ending the year at an all-time low.
The global poll of 3,800 accountants showed that all key regions recorded a negative confidence score with signs of growth weakening in the world’s three biggest economies - the US, China and the Eurozone.
The biggest concern for respondents was again rising costs, while 47 percent said they are considering laying off staff.
Another 39 percent of respondents said they are considering scaling back investment in new capital projects, compared with just 16 percent who are looking to increase investment in new projects.
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