83% Gulf executives don’t expect a long-lasting recession

A vast majority of executives surveyed by ratings agency Standard & Poor’s during a recent convention in Abu Dhabi do not fear a double-dip recession.

Over three quarters (77.3 per cent) of respondents at S&P’s Leaders’ Forum expect the global economy to witness mild growth over the next three years while another 6.1 per cent expect high growth. A significant minority (9.1 per cent), however, don’t see the world economy in 2013 much different from what it is today, while just 7.6 per cent expect the recession to last for another three years.

“It appears that respondents had little concern of a doomsday scenario,” S&P said while sharing aggregate results with Emirates 24|7. “That said, there were caveats such as: ‘Emerging markets will realise high growth while advanced economies will register slow growth’,” it added.

S&P Leaders’ Forum brought together 170 leading economists, government and regulatory officials and top calibre investors from the financial industry and leading family offices, the ratings agency said, and 47 per cent of the audience responded to the event questionnaire, it said.

Among other interesting findings of the audience poll was the fact that a vast majority of executives expect a GCC Monetary Union to contribute positively to regional economic growth. While almost a third of respondents (31.8 per cent) believe that a monetary union would result in high economic growth, almost half (47 per cent) saw a union resulting in mild economic growth.

A minority (13.6 per cent), however, said they saw a union having no impact on the economic growth of the region, and the remaining 7.6 per cent chose ‘other’ in their response, qualifying it with a comment.

“While respondents generally agreed on the benefit s of a unified GCC monetary system, there were some strong sceptical views attached such as ‘Will not become reality for some time’ and ‘Not going to happen’,” S&P revealed as part of the aggregate results. “Some suggestions came with a cautionary note; ‘No peg to dollar in UAE’,” S&P said.

Also interesting was the fact that a third (33.3 per cent) of respondents see high growth in GCC regional/local fixed income markets within the next three years, with another 50 per cent seeing mild growth. Only 6.1 per cent said they did not see fixed income markets growing in the next three years.

“The views were significantly positive but comments suggested clarification,” S&P said. Comments included: ‘Definitely, based on strong macro eco backdrop/ fundamentals credit’ and ‘Inevitable, but depends on how government is supporting debt insurances’.

In other findings, only a little over a quarter (27.3 per cent) of respondents see a bright future for exchange traded funds (ETFs) in the region, while a quarter (25.8 per cent) do not see a future for ETFs in the GCC, and 42.4 per cent see only a ‘mild future’ for the instruments in the region.

“The prospect of regional ETFs seemed more than plausible though there were criteria for the vote: ‘Regional financial markets are not yet developed enough’, ‘Banking intermediation is still dominant in the MENA region’, ‘Until stock markets develop more and will open up more (i.e. Saudi Market should open up more to foreign investment) to foreign investments and improve their liquidity, it will be difficult for ETFs to surge’ and ‘Long term yes assuming liquidity is adequate. Short term no’,” were among some of the comments made by respondents to the survey.