YPO Global Pulse: Economic confidence bounces back in Middle East and North Africa

Turnaround from being the most pessimistic region in the world, with its lowest business confidence rating in a seven-year history

ABU DHABI, 7th February 2017 YPO, the premier chief executive leadership organisation in the world, reported today that confidence among business leaders in the Middle East and North Africa (MENA) recovered in the fourth quarter of 2016. The YPO Global Pulse Confidence Index for MENA, which tracks economic confidence levels among chief executives in the region on a quarterly basis, jumped 5.6 points to 59.5.

The upswing in confidence follows an increase in crude oil prices and represents a dramatic turnaround from the previous quarter, when MENA was the most pessimistic region in the world, with its lowest business confidence rating in the seven-year history of the YPO survey.

Notably, there was a significant upturn in confidence in Saudi Arabia, the world’s largest oil exporter, where confidence surged 16.2 points to 54.1, reversing the 24-point crash recorded in the third quarter.

This increased optimism was reflected in Lebanon as well, with a 12.4-point jump in confidence to 61.1, its highest level for two years. Similarly, Egypt climbed 13.4 points to firmly optimistic territory with a score of 64.5.

There was also a strong improvement in confidence in the oil-producing Gulf Cooperation Council (GCC) countries, which climbed 5.7 points to 57.5 in the quarter, their highest level since July 2015.

A more moderate improvement in sentiment was seen in the United Arab Emirates, which was up 1.5 points to 59.7, its highest level in two years.

“Business leaders in the MENA region will be hoping that oil prices continue to recover throughout 2017. Should this be the case, the outlook across the region will continue to improve,” said Chaker Saab, Chairman of Tinol Paints International and Regional Communications Officer for the YPO MENA Region. “However, chief executives will be acutely aware of the growing uncertainty about the short- to mid-term direction of the global economy. They will also be paying close attention to policy developments in the United States.”

Globally, the YPO Global Pulse Index for the fourth quarter of 2016 climbed by 3.0 points to 62.2, its highest level for two years. The United States was the most confident region in the world, improving 4.2 points to 64.6, its highest level since January 2015. Confidence in the European Union remained steady at 60.9, and Asia gained 1.2 points to 61.2.

Elsewhere, confidence in Latin America jumped by 2.4 points to 58.3. Africa reported a 0.8-point decline, landing at 54.7, making it the second least confident region in the world after non-EU Europe, which increased 2.5 points to 54.3.

Key findings in MENA

Chief executives confident about prospects for 2017

Business leaders in MENA were positive about the prospects for their own organisations over the next 12 months, as indicated by the three key indicators of the YPO Global Pulse Confidence Index: sales, hiring and fixed investment.

For the region, the YPO Sales Index showed that two-thirds of CEOs (67%) expected to improve their revenues, whereas 6% predicted a fall in revenue. Similarly, the YPO Employment Index indicated that 35% expected to grow their headcount versus 6% who predicted a decline in staff numbers. Importantly, the YPO Fixed Investment Index revealed that 45% of CEOs expected to increase fixed investment over the next year, while 9% expected to reduce fixed-investment levels in the next 12 months.

Economic conditions set to improve in first half of the year

When asked to assess business and economic conditions over the next six months, nearly half (44%) of business leaders in MENA predicted that the economic climate would improve, compared to only 17% who believe that conditions will deteriorate.

YPO Global Pulse Confidence Index
The quarterly electronic survey, conducted in the first two weeks of January 2017, gathered answers from 1,514 YPO chief executive officers across the globe, including 73 in the Middle East and North Africa. Visit www.ypo.org/globalpulse for more information about the survey methodology and results from around the world

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Linda Fisk
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