Corporate expectations high for Gulf: EIU

Corporates worldwide are more hopeful of improvement in business scenario in the Gulf over the next 12 months, said a study.

Corporate expectations barometer for Middle East and North African countries, which saw a decline, has increased to almost seven in November, a survey by Economic Intelligence Unit (EIU) has shown. The region has also seen an improvement in investor confidence in the last few months, different surveys have shown. A recent survey by Shuaa Capita showed that investor confidence in GCC was up by 19 points after the repayment of the Nakheel 2009 sukuk. In UAE, the index that had gone down to 82.5 points rose to 108.9 after the repayment.

Various reports and analysis in recent past have showed positive indicators emerging in the economy. According to analysts, 2010 is a year of recovery in the region, which has already started. According to the EIU survey, business people were “cautiously optimistic” in May last year.

However, the scenario has improved and the barometer of their confidence has risen.

Corporates have also raised their expectations for global GDP forecast for 2010 to 1.8 per cent. In May they expected 2010 GDP to be 0.2 per cent. Executives also think they would increase their workforce instead of reducing it in the next 12 months.

“It appears respondents’ hopeful outlook was warranted. The barometer has gradually risen since May, in line with the improvement in stock indices and the modest rebound of major economies,” the survey said.

The barometer reflects expectations of prospects related to specific company, industry, country, region and the world.

EIU said there has been an improvement on all fronts.

Globally, confidence related to global business prospects over the next 12 months improved from 5.9 in May to 7.3 in November, whereas the index for region specific prospects increased to 6.9 from 6.1.

The improvement in business sentiment is in line with the GDP growth and rebounding stock markets, it noted. The corporates raised their 2010 global GDP growth forecast to an average of 1.8 per cent in December, up from 0.2 per cent in May.

And almost one-third of the executives surveyed expect their workforce to grow than to shrink over the coming year. “Prospects appear to be improving for respondents’ own companies and for the global economy as a whole,” said EIU.

Amid concerns over durability of recovery, it remains to be seen whether global GDP growth in the second half of 2009, driven mainly by public spending and inventory restocking, is sustainable, EIU said. In developed economies, unemployment is high and consumer confidence low, hampering growth in export-dependent countries, it said.

 

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