Sunday, January 26, 2020

Economy Diversifies to Boost Growth in 2020

DUBAI, United Arab Emirates-Sunday 26 January 2020 [ AETOS Wire ]

A survey of nearly 440 senior accountancy experts on economic conditions in MESA showed a recovery in confidence in Q4.  A revival in growth is likely to come mainly from the non-oil sector as the economy diversifies

Detailed in the latest Global Economic Conditions Survey (GECS), jointly published by ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) the findings also point to mixed results from government spending measures as some economies make greater efforts to boost the non-oil sectors of their economies, e.g. United Arab Emirates (UAE), Qatar and Saudi Arabia.

Commenting on the findings, Fazeela Gopalani, Head of Middle East ACCA, said: ‘A revival in growth is likely to come from the non-oil sector as the economy diversifies. Reforms in the entertainment and tourism sectors are expected to boost growth in Saudi Arabia this year. The Q4 GECS recorded a significant improvement in orders and confidence compared with Q3, suggesting a brighter outlook. Non-oil private sector growth is likely to support growth in 2020, especially with the World Expo set to take place in Dubai later in the year.’

The dominant influence on confidence in the Middle East region is fluctuations in oil prices. Both confidence and oil prices recovered in Q4 and there was also a lessening of geopolitical risk in the region. Oil prices are expected to be in the $60 to $70 per barrel range this year.  A positive development for those countries with a fixed exchange rate with the US dollar (Saudi Arabia, United Arab Emirates (UAE), Oman, Bahrain and Qatar) is the reduction in interest rates by the US Federal Reserve. The US cuts in the second half of last year totalled ¾ percentage point and were immediately followed by reductions of similar size in these countries

In Q4, most of the components of the regional index are slightly below their long-run average. This is consistent with growth in the region of around 1.5% to 2% in 2019.

Last year GDP growth in Saudi Arabia slowed to less than ½%, dragged lower by falling oil production and lower average oil prices. As the largest oil exporter Saudi Arabia is at the forefront of OPEC efforts to stabilise prices by controlling output. Saudi oil output is likely to be cut again this year as these efforts continue.

There is limited official data available so far on UAE economic activity in 2019. But survey data points to annual GDP growth of between 1.5% and 2% last year.  The GECS orders index averaged -20 over the four quarters of 2019, little changed compared with 2018 (-19), when UAE growth is officially recorded at 1.7%.   But the UAE’s oil production, which fell 7% last year, will decline again slightly in 2020 according to the OPEC+ agreement reached last December. Based on the most recent GECS orders index values, which were above recent averages, the outlook is for GDP growth this year of around 2%, boosted by non-oil activity.

Speaking of the global picture Michael Taylor, chief economist at ACCA said: ‘Many risks to the global economy in 2020 are the same as in 2019, including trade tensions between the US and China, which were a major cause of slowing global growth. Recent developments in this area have been positive, but risks of a re-escalation with renewed tariff increases remain.

Fazeela Gopalani concludes: ‘Lower interest rates in the region should stimulate private sector credit growth and help to boost the non-oil private sector economy. The real estate sector, increasingly important in many economies in the region, will benefit especially from lower borrowing costs. Encouragingly, the region’s GECS index that measures problems accessing finance is close to a three-year low in Q4.

GECS Q4 2020 can be found online at:

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here:

About IMA® (Institute of Management Accountants)

IMA®, named 2017 and 2018 Professional Body of the Year by The Accountant/International Accounting Bulletin, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) program, continuing education, networking and advocacy of the highest ethical business practices. IMA has a global network of more than 100,000 members in 140 countries and 300 professional and student chapters Headquartered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe, and Middle East/India. For more information about IMA, please visit


Nadia Manuelli

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