Middle East Sees Boost in Economic Confidence Amid Global Uncertainty, Q3 Survey Shows

Economic confidence surged across the Middle East in Q3 2024, suggesting a positive outlook despite worldwide economic challenges and local geopolitical pressures, according to the latest Global Economic Conditions Survey (GECS) by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA).

The survey, which assesses quarterly economic confidence globally, highlighted substantial improvements in the Middle East’s capital expenditure and employment indices. These metrics rose well above historical averages, signifying robust non-oil sector growth in economies such as Saudi Arabia. This progress comes despite declining oil prices, indicating a promising trend toward economic diversification and stability across the region.

Kush Ahuja, Head of ACCA Middle East, attributes the positive sentiment to the resilience of non-oil sectors, particularly in nations pursuing economic reform and diversification. “The positive results likely reflect the continued resilience of non-oil economies in key countries such as Saudi Arabia,” Ahuja explained. He also noted the impact of expectations for a more accommodative US monetary policy, as many Middle Eastern currencies are pegged to the US dollar. “Compared with Q2, survey respondents also became more optimistic about the potential for increased government spending over the next 12 months,” he added.

The New Orders Index, which monitors new business orders, experienced a minor dip in Q3 yet remained above average, underscoring the steady demand and investment across multiple sectors. Despite the complex global landscape, Middle Eastern economies appear to be well-positioned for sustained growth, with many nations fortifying economic policies to reinforce long-term financial stability.

Jonathan Ashworth, Chief Economist at ACCA, commented on the promising Q3 performance, despite persistent global tensions. “The Middle East’s focus on non-oil growth is likely to continue supporting this positive trajectory. Moreover, GDP growth in the region is set to accelerate in 2025 with a rise in oil production,” Ashworth noted.

In contrast to the Middle East’s positive trend, other regions faced challenges. While North American economic confidence showed improvement, it only partially rebounded from previous lows. Asia-Pacific confidence dropped notably, weighed down by concerns over China’s ongoing economic struggles. Western Europe also saw a decline, primarily due to a sharp drop in UK confidence ahead of anticipated tax hikes in the upcoming budget.

At the global level, confidence experienced a modest decline, as rising operating costs remain elevated. This highlights the caution required by central banks in easing monetary policies, particularly given current geopolitical developments. Encouragingly, the share of global respondents reporting issues accessing finance continued to decrease, a trend likely supported by recent central bank policy adjustments.

Alain Mulder, IMA’s Senior Director of Europe Operations, emphasized the careful balance businesses must strike amid global instability. “Increased policy stimulus should boost the Chinese economy, and the shift to rate cuts by the US Federal Reserve, along with other central banks, will gradually support global activity,” Mulder said. However, he cautioned that heightened geopolitical risks and uncertainty surrounding the upcoming US election could dampen corporate confidence.

Overall, the Middle East’s economic resilience in Q3 2024 offers a beacon of optimism as global markets navigate an environment marked by unprecedented uncertainty.