UAE 'most confident economy'
Dubai, August 8, 2012
The UAE remained the most confident of all markets on growth prospects, according to a recent survey conducted by global financial experts.
The Global Economic Conditions Survey for the second quarter was undertaken by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA).
While the overall loss of momentum is consistent with global trends, it is worth noting than only the UAE recorded net confidence gains in the second quarter, said the global survey of 2,700 professional accountants which is now well into its third year.
Not surprisingly, positive attitudes towards the global economy are also more resilient in the UAE than elsewhere, with 46 per cent of respondents thinking the recovery is on track, down from 53 per cent.
About 35 per cent of respondents have reported confidence gains (down from 42 per cent) against 27 per cent reporting losses (up from 23 per cent), it added.
The UAE confidence comes as a breath of fresh air at a time when growth across the world's most developed economies has stalled once again and global economy is as fragile as it has ever been in the last three years, said the ACCA-IMA survey.
The survey suggests that hints of a stronger recovery in early 2012 were mostly down to misplaced optimism, and that most of the gains made at the time have since been reversed.
The economic recovery has slowed down again in early 2012 sparking fear that governments which are already living beyond their means may struggle to get it back on track through extra public spending, said the experts.
On the UAE market, the survey stated that the cash flow pressures appeared to have eased significantly in the emirates over the last three months, with fewer professionals worrying about the survival of their suppliers or customers, and incidences of late payment are down as well.
Importantly, new orders appear to be on the rise, the ACCA-IMA survey added.
However, the survey cautioned that all was not well as a number of respondents reported a surge in input prices in the UAE and significant exchange rate fluctuations in the second quarter, mostly due to the Dirham’s dollar peg and expectations of a further round of quantitative easing in the US.
Respondents also reported a slowdown in the labour market, with employers apparently preferring to invest more in their existing staff, and also saw a diminishing number of value-added opportunities available to their organisations, the survey added.
China’s slowing economy has dominated the survey findings this quarter, although ACCA and IMA stress that there are few signs of the hard landing many commentators had feared.
'The point now is to see how far and how fast the Chinese slowdown will travel. Our members in Africa tend to feel any fallout from Asia fairly quickly, and there could be implications for other markets which trade with China,' remarked survey editor Manos Schizas, the senior economic analyst with ACCA.
According to the survey, the flip side of the Chinese slowdown is a recovery for the US economy, where investment is on the rise and confidence is high, despite significant potential problems.
With growth faltering once again, the finance professionals surveyed said they were rethinking their attitudes towards public spending.
However, the policy choice is not quite so simple. Accountants working in major markets such as the US, China, Russia, Malaysia, or Pakistan - economies relied on by others for trade and export opportunities - believe that fiscal stimulus by their governments is already unsustainable.
It was in only a few markets that respondents believed that their governments could spend both robustly and sustainably – places such as Singapore, or the UAE.
'Finance professionals who responded to this survey were quite at ease with the prospect of austerity until mid-2010. Then the recovery failed to take off and everything changed. Relatively few believe their governments can make austerity work, even in countries such as Ireland where it has been executed quite successfully,' said Schizas.
'Except this time there is a limit to what even countries with strong credit ratings and no liquidity constraints, such as the US and China, can do,' he added.-TradeArabia News Service
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