Middle East Economic Indicators Show Strong Growth in Q3

The most recent Global Economic Conditions Survey (GECS) conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA) reveals a significant enhancement in economic confidence throughout the Middle East during the third quarter of 2024. This shift reflects a sense of optimism in the region, despite facing global economic challenges and local uncertainties.

Positive Trends in Capital Expenditure and Employment

The survey highlights substantial progress in the Capital Expenditure and Employment indices within the region, both indicators surpassing their historical averages. This positive trajectory is indicative of the strong performance of non-oil economies in major nations like Saudi Arabia, even amidst declining oil prices since the second quarter of the year. The results underscore the region's resilience, suggesting a move towards diversified economic growth and increased stability.

Demand and Investment Persist

Although the New Orders Index experienced a slight dip, it continues to exceed average levels, signalling sustained demand and investment across diverse sectors. This development is particularly encouraging given the current climate of uncertainty, marked by geopolitical tensions and fluctuations in global oil prices that pose significant challenges.

Commenting on the positive trends, Kush Ahuja, Head of ACCA Middle East, stated, “The positive results likely reflect the continued resilience of the non-oil economies in key countries such as Saudi Arabia, as well as rising expectations of easier U.S. monetary policy, with many currencies in the region pegged to the U.S. dollar. Compared with Q2, survey respondents also became more optimistic on the prospects for increases in government spending over the next 12 months.”

Strategic Policies Fuelling Confidence

The survey reflects a growing belief that strategic economic policies and targeted investments are effectively enhancing the Middle East’s economic and financial stability. Many economies in the region are preparing for sustained growth, demonstrating that, despite a volatile global landscape, the Middle East is strategically positioned to confront and overcome these challenges.

ACCA’s Chief Economist, Jonathan Ashworth, added, “The Middle East’s performance in Q3 is encouraging, especially considering the current geopolitical context. The region’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 amid a rise in oil production.”

Varied Confidence Levels in Other Regions

Confidence levels have improved in North America, though the recovery has been less than robust, recovering only a fraction of its prior decline. Conversely, there has been a notable drop in confidence in the Asia Pacific region, primarily due to concerns regarding the ongoing fragility of the Chinese economy. Similarly, confidence in Western Europe has declined significantly, particularly in the UK, where apprehensions about potential tax increases in the forthcoming Budget have emerged. Overall, there has been a moderate decrease in global confidence.

Ongoing Economic Challenges

Despite some positive indicators, the survey indicates that the percentage of respondents reporting increased operating costs remains historically high across most regions. This suggests that central banks must approach monetary easing with caution, especially considering the continuing geopolitical issues. However, it is promising to note that the share of global respondents facing difficulties in accessing finance has decreased again, reflecting the effects of easing policies by central banks.

Jonathan Ashworth commented: “The global economy has been quite resilient so far in 2024, but the latest survey of accountants points to some easing in growth at the current juncture.”

Alain Mulder, Senior Director of Europe Operations & Global Special Projects at IMA said: “While the increase in confidence in North America is welcome, the key indicators are consistent with some slowing in the U.S. economy and significant caution on behalf of businesses. But with the job market showing resilience and the Federal Reserve beginning its rate-cutting cycle, the most likely scenario for the U.S. economy still looks to be a soft landing.”

Ashworth concluded: “On a positive note, increased policy stimulus should boost the Chinese economy, and the move to rate cuts by the U.S. Federal Reserve, and many other central banks, will increasingly support global activity. That said, geopolitical risks are extremely elevated, and significant uncertainty about the upcoming U.S. election could increase corporate caution. Bottom line, businesses are currently operating in a world of heightened uncertainty.”

Read the full report here - Q3 2024 GECS Report.