Despite recent positive reports in the media, new analysis shows that UAE business confidence has declined significantly in the fourth quarter of 2014. This is certainly a result of the dramatic drop in oil prices, which affected a number of industries in the oil-dependent Gulf economy.
The drop in business confidence in the UAE was identified by the latest YPO Global Pulse Confidence Index, compiled based on a quarterly survey, conducted in the first two weeks of January. The online poll by YPO (Young Presidents’ Organization) gathered answers from nearly 2,800 chief executive officers around the world, including over 120 from the Middle East and North Africa region. The Index for UAE slipped 10.5 points to 61.8, which is its lowest level since January 2013. Researchers point out that the falling oil prices caused more cautious outlook among business leaders in the country.
CEOs in the UAE were less optimistic about business and economic prospects in the short term than other CEOs in the region for the first time. While the UAE confidence index fell to 61.8, the levels for the region were at 62.4, a drop of 3.4 points from the previous quarter. The regional YPO Global Pulse Confidence Index, however, is still the second-highest in the world, only after the U.S.
The survey also asked business leaders on their outlook for the first half of year 2015. 45% of CEOs in the UAE anticipated better conditions, while 30% expected a less favourable economic environment. Another 25% of the respondents predicted conditions to remain largely the same.
Globally, the United States reported a rise of 0.8 points to 65.0 in its business confidence, while European CEOs’ fresh optimism drove the Index to increase 1.2 points to 61.2. Asian business confidence fell to its lowest level since October 2013 (62.2), while in Africa the Index dropped to its lowest level in more than five years (59.3) as a result of the weakening commodities prices.
