Business confidence in the Middle East and North Africa (MENA) remained relatively stable in the second quarter of the year, while improving significantly in the Gulf region, according to a new survey.
The YPO Global Pulse Confidence Index for MENA edged up 0.3 points from 55.6 in the first quarter of 2016 to 55.9, halting a steady decline in the last six consecutive quarters.
The rebound in the price of crude oil during the second quarter contributed to bolstering confidence among YPO members in the GCC, with an index increase of 4.9 points, from 52.2 in the first quarter 2016 to 57.1.
Among the GCC countries, Saudi Arabia’s jump in confidence was the most significant, rising 8.7 points to 62.2.
In the UAE, the overall YPO Global Pulse Index increased 5.4 points during this period, reaching 54.8. This follows a slight drop to 49.4 in the first quarter of 2016, its lowest level since the survey began in 2009.
Elsewhere in MENA, Egypt and Lebanon reported modest increases in confidence levels while business leaders from other countries remained less optimistic with a significant decline of 6.9 points in Jordan, reaching an index level of 49.4.
Dr Florence Eid-Oakden, YPO member and founder and CEO of Arabia Monitor, said: “The rise in GCC business confidence, particularly the continued pickup in Saudi Arabia, with evidence of the same emerging in the UAE, seems to be driving the outlook across MENA.
“The low point for CEO optimism in Saudi Arabia was probably in the fourth quarter of 2015, due to a combination of low oil prices and the unclear outcomes of economic reforms.
“The recent pickup in oil prices is now clearly helping to improve the business and economic outlook in these countries, while macro challenges still linger in other countries in the MENA region.”
Despite the significant improvement in confidence within the GCC, business confidence in MENA remains below the worldwide index.
For the second quarter of 2016, the YPO Global Pulse Index rose 1.4 points to 59.7, its highest level in a year.
When regional business leaders were asked about their expectations of the overall business and economic conditions affecting their companies six months from now, 20 percent said they anticipated conditions to worsen, compared to 34 percent from the previous quarter.
When looking ahead 12 months, 59 percent said they were optimistic that sales would increase. However, business leaders and chief executives in MENA expressed a more cautious outlook regarding expectations for increasing fixed investment and hiring for the next year.
The majority (more than 60 percent) expected fixed investment and headcounts to remain the same in the next year, reflecting growing pressure on cost and rate of hiring.
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