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Fri 9 Aug 2019 09:55 AM

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Volatile oil prices dent Middle East business confidence in Q2 - survey

Global Economic Conditions Survey shows confidence levels in the Middle East are above average despite Q2 dip

Volatile oil prices dent Middle East business confidence in Q2 - survey

Volatile oil prices have dented economic confidence in the Middle East, according to new research from the Association of Chartered Certified Accountants and the Institute of Management Accountants.

The Q2 Global Economic Conditions Survey - a global poll of 1,162 accountants - showed that confidence remains above the record low reached at the end of 2018, consistent with a modest global economic slowdown.

The confidence index in the Middle East fell slightly in Q2, but it remains well above the levels recorded through the second half of 2018 when the oil price fell sharply, and higher US interest rates had an impact.

Globally, confidence levels in the Middle East compared favourably to the US and China, which have revealed high levels of uncertainty, with the US results showing a sharp fall in confidence to the lowest level in eight years, largely due to trade tensions as tariffs were increased to 25 percent on a range of Chinese imports.

Confidence in the UK economy also fell back from Q1 but not to the low levels of Q4 2018.

Fazeela Gopalani, head of ACCA Middle East, said: "It’s clear our economy is not immune from global pressures and influences. The US and China trade war has had an impact on the global stage, while reduced global demand for oil is a downside risk for oil producers.

"For the Middle East, the prospect of lower US interest rates is a move that would allow many countries in the region to ease their own monetary policy, and so that is a cause for optimism."

Gopalani added: "The GECS points to a slowing global economy with significant downside risks reflected in weak confidence. The biggest risk to the global economy remains a significant further escalation in the US-China trade war. A sharp slowdown in China and a no deal Brexit in the UK are also downside risks we need to consider."