YPO Global Pulse Survey: Economic Confidence in Middle East and North Africa Falls to Four-Year Low
ABU DHABI, United Arab Emirates, May 10, 2016 (GLOBE NEWSWIRE) — YPO, the premier network of global business leaders and chief executives, announced that economic confidence amongst CEOs in the Middle East and North Africa continued to decline in the first quarter of this year. The YPO Global Pulse Confidence Index for the Middle East and North Africa decreased for the sixth consecutive quarter, falling 0.8 point to 55.6, trailing the global confidence composite score of 58.3. Only once before in the seven-year history of the quarterly survey has confidence amongst business leaders in the region dropped to this level, which was during the fourth quarter of 2011 at the height of the global economic crisis.
Saudi Arabia, which experienced a dramatic loss of confidence in the second half of 2015, bounced back significantly in the first quarter of the year, climbing 14.1 points to 53.5, although a full 15 points below the confidence level 18 months ago. Confidence in the United Arab Emirates remained gloomy after a sixth successive quarterly decline, slipping 0.9 point to 49.4. Lebanon experienced a sharp decline in optimism, falling 7.2 points to 46.4, reflecting a pessimistic economic outlook.
In contrast, Egypt enjoyed a modest increase of 1.7 points to 59.2, and Israel remained firmly in optimistic territory at 62.3, almost unchanged from the previous quarter.
“There is little surprise that business leaders in the region continue to show concern about the economic challenges affecting many countries,” said Bassel Hamwi, IFC head, Middle East and North Africa and member of YPO Levant Chapter. “With a combination of slow global economic recovery, cheap oil and regional instability, economic confidence in MENA is unlikely to improve in the short term. CEOs are likely to remain cautious throughout 2016, closely watching global economic indicators for signs of improvement and opportunity.”
Taken as a whole, the Gulf Cooperation Council (GCC) sub-region of MENA, which includes the major oil exporting countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, reported an increase of 6.3 points in confidence, on the back of an alarming slump in confidence in the previous 18 months. Confidence amongst GCC countries climbed 6.3 points from the final quarter in 2015 to 52.2, thanks to improved outlooks in Kuwait, Oman, Qatar and Saudi Arabia. This is still a full 18 points below its October 2014 level, before oil prices began to slump, but it does suggest that the worst is now over.
Globally, in the first quarter of 2016, the YPO Global Pulse Index composite score remained steady at 58.3, reflecting a relatively optimistic economic outlook. Confidence in Africa increased 2.2 points to a relatively positive 53.2 while confidence in the United States edged up 0.5 point to 59.6. Economic sentiment in Asia remained almost unchanged, gaining 0.3 point to 60.0 while confidence in the European Union climbed 1.1 points to 61.6. In Latin America, confidence dropped significantly by 3.6 points to 50.8.
Key findings for MENA
Economic conditions expected to remain tough. When considering the short-term outlook, more than a third (34%) of CEOs expected business and economic conditions to deteriorate over the next six months, with 35% anticipating little or no change. Only 31% predicted an improvement in the economic climate.
Fall in optimism across sales, hiring and fixed investment. Whilst all three component parts of the YPO Global Pulse Index (tracking sales, employment and fixed investment) dropped in the first quarter of 2016, CEOs in the MENA region remained relatively optimistic about the prospects for their own organisations in 2016.
The YPO Global Pulse Sales Index for the Middle East and North Africa fell 2.7 points to 61.1. More than half of CEOs (55%) still expected to grow revenues in the next 12 months, compared to only 19% who predicted that sales would contract and 26% who expected turnover to remain at the same level.
The Employment Index for the region slipped 2.0 points to 55.8. Almost a third (31%) of business leaders expected to increase headcount in the next year, versus only 13% who expected the size of their workforce to shrink. The majority of CEOs (56%) said that their headcount was likely to stay at the same level.
The Fixed Investment Index for MENA dropped 1.7 points to 58.2 in the first three months of the year. Forty percent of CEOs expected to increase fixed investment in the year ahead, and 41% expected investment levels to remain unchanged. Only 19% forecasted a decrease in fixed investment in the next 12 months.
YPO Global Pulse Confidence Index
The quarterly electronic survey, conducted in the first two weeks of April 2016, gathered answers from 2,209 chief executive officers across the globe, including 123 in the Middle East/North Africa region. Visit www.ypo.org/globalpulse for more information about the survey methodology and results from around the world.
This is an unofficial translation of the original release. The release in its original language is the only official, authoritative version.
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