(MENAFN- Khaleej Times) Businesses in the UAE are reinvesting earnings and showing increased dynamism in the second quarter of 2013 despite tighter demand and cash-flow conditions, a new study revealed.
The latest survey showed that the current conditions in the UAE have given a boost to business confidence in the region, with 40 per cent of businesses taking part in the survey reporting an increase confidence in the prospects of their organisations, up from 33 per cent in the previous quarter.
The Association of Chartered Certified Accountants says respondents in the UAE are now beginning to revise their expectations of an increase in government spending further upwards. - KT file photo
The Global Economic Conditions Survey, or GECS - from the Association of Chartered Certified Accountants, or Acca, and the Institute of Management Accountants, or IMA - shows that only 18 per cent of the respondents reported a loss of confidence.
The Gecs, the largest quarterly economic survey of accountants in the world, gauges the views of Acca and IMA finance professionals.
Emmanouil Schizas, the Acca's senior economic analyst and editor of the Gecs, said across the globe, the survey shows the highest level of optimism about the national and global economies in two years, and the strongest year-on-year improvement in three years.
"Businesses in the UAE reflect that confidence. Right now, they are experiencing the best financing conditions in the world as a result, in part, of a greater supply of growth capital over the last 12 months and a significant amount of monetary stimulus at the global level."
Schizas pointed out that despite continued positive news about the global and national economies, the Gecs business confidence index has just about inched in the right direction."After a surge in business confidence in the first quarter that was perhaps a little premature, confidence levels are now in line with fundamentals."
"What is encouraging is that the marginal improvement in global business dynamism in early 2013 has now accelerated across all measures of investment, orders and employment. Employment in particular is recovering quickly and is now stronger than at any point in the last two years," said Schizas.
"UAE finance teams are looking at the numbers and telling us that the businesses they work for are demonstrating greater dynamism and funding is going more into organic growth. The knock-on effect is a boost to capacity building - investment in both capital and employees - for the businesses in UAE. Better access to growth capital is adding to these trends, which are reflected in the high confidence levels of the business community," said Susie Isaacson, the Acca's head of the UAE.
"Respondents in the UAE have traditionally expected government spending to rise substantially in the medium term, but are now beginning to revise their expectations further upwards. A loosening of fiscal policy in the medium term is bound to have an impact on confidence and economic performance."
The survey revealed that despite rising confidence, faith in the global recovery has fallen marginally, even though it is still higher in the UAE than any other major Acca or IMA market. More than two-thirds, or 68 per cent, of the Emirates' sample are optimistic about the recovery, down from 70 per cent in the first quarter 2013.
However, the survey shows that it is a different story across the wider Middle East region, with business confidence taking a hit, despite a rise in business capacity and improving access to growth capital. One-third of Middle East-based respondents taking part in the survey reported a loss of confidence in the prospects of their organisations, due mostly to rising cash flow and demand pressures.
Another finding of the survey is that faith in the global economic recovery has never been stronger in the last 18 months, with 59 per cent of finance professionals in Middle East sample reporting a more positive outlook.
On a global scale, the Gecs found both business confidence and optimism about the economy continued to rise during the second quarter of the year.
Nearly half of the Gecs sample, or 47 per cent, felt that the state of the economy was improving or about to do so, up from 43 per cent in early 2013, while just under 50 per cent were pessimistic, predicting deterioration or stagnation, down from 54 per cent in the first quarter.
This is the highest level of optimism about the national and global economies in two years, and the strongest year-on-year improvement in three years.
The survey also revealied that there was improved availability of growth capital on a global scale in the second quarter of this year, which was driving confidence upwards.
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