YPO Global Pulse Survey: Business confidence in Middle East and North Africa falls to three-year low

ABU DHABI, Nov. 3, 2015 (GLOBE NEWSWIRE) — Business confidence amongst CEOs in the Middle East and North Africa declined in the third quarter of the year, hitting its lowest level since January 2012. The YPO Global Pulse confidence index for the Middle East and North Africa dropped 3.5 points to 60.8 to 57.3, slightly below the global index of 58.1.

Confidence in Saudi Arabia and the United Arab Emirates, two of the top five oil exporters in the world, have seen confidence drop from roughly 70 two years ago to the mid-50s today. In fact, the third quarter saw a sharp drop in confidence in Saudi Arabia, which fell 17.9 points to 54.1, its lowest level since the inception of the survey in July 2009. Similarly, confidence amongst CEOs in United Arab Emirates, which has the largest weighting in the survey, slipped 0.6 point from 58.1 to 57.5, its lowest level since January 2011 and below the regional index.

There was also a decline in optimism amongst CEOs in Israel, Bahrain, Libya, Kuwait and Syria, a reflection of falling oil prices and ongoing social and political unrest in many parts of the region. Oil exporting countries like Saudi Arabia, Russia, Iran, Iraq, Nigeria, the U.A.E., Venezuela, Canada, and Mexico have all been hit hard as oil revenues have declined. Falling oil revenue makes it more challenging for these countries to finance government spending. The steady erosion in confidence in the region seems to be largely a function of falling oil prices.

“The drastic drop in oil prices is evidently impacting the business and economic outlook in the region, as this represents the fourth consecutive quarter where confidence has declined. On top of this, the unrest in Syria, Yemen and other countries in the region is now affecting the outlook for businesses in MENA,” said Rafi Demirjian, chairman of Demirjian Global and chair of the YPO Middle East/North Africa Region. CEOs may scale back on their growth plans during 2016 and will undoubtedly remain watchful of oil prices and further changes in the regional and global socio-economic environment.”

Globally, the YPO Global Pulse Confidence Index fell 2.8 points to 58.1, its lowest level in four years, with moderate declines in every region. The United States fell to its lowest level for three years, landing at 59.9, whilst the European Union dropped 1.4 points to 60.2. Asia suffered the biggest decline, losing 4.7 points in the quarter, to finish at 57.3.

Key findings for MENA

Economic conditions worsening: Exactly half of CEOs surveyed reported that the overall economic conditions affecting their businesses had deteriorated in the third quarter of 2015 versus only 20% who felt the economic environment had improved. By contrast, in the second quarter, 37% had reported a decline in conditions, and 33% had cited an improvement.

Mixed feelings about future prospects: When looking ahead, CEOs were split on whether conditions would improve in the final quarter of 2015. A third of those surveyed expected better conditions in the next six months, compared with 32% who predicted a less favourable economic environment. Over a third (35%) expected conditions to remain the same.

Twelve-month business forecasts remain upbeat: Whilst confidence fell in the fourth quarter, business leaders in the MENA region still remain relatively positive in their own organisations’ prospects for sales, hiring and fixed investment in the next 12 months.

Sixty-one percent of CEOs surveyed expected to grow revenues in the next year, compared to only 15% who predicted a reduction in turnover. Almost a third (31%) expected to increase headcount within their organisations, versus 10% who expected to cut staff numbers. Finally, 44% of respondents expected to increase fixed investment, versus only 9% who predicted a reduction.

YPO Global Pulse Confidence Index

The quarterly electronic survey, conducted in the first two weeks of October 2015, gathered answers from 1,915 chief executive officers across the globe, including 130 in Middle East/North Africa. Visit www.ypo.org/globalpulse for more information about the survey methodology and results from around the world.

About YPO

YPO (Young Presidents’ Organization) is a not-for-profit, global network of young chief executives connected through the shared mission of becoming Better Leaders Through Education and Idea ExchangeTM. Founded in 1950, YPO today provides 23,000 peers and their families in 130 countries with access to unique experiences, extraordinary educational resources, access to alliances with leading institutions, and participation in specialized networks to support their business, community and personal leadership. Altogether, YPO member-run companies employ more than 15 million people around the world and generate US$6 trillion in annual revenues. For more information, visit www.ypo.org.

This is an unofficial translation of the original release. The release in its original language is the only official, authoritative version.

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