Indicators of global economic confidence in the first quarter, the highest in 10 years

Poll: High oil prices and vaccination programs support increased confidence in the UAE economy

Improved oil revenues and easing restrictions imposed as a result of the epidemic contributed to the strengthening of the economic recovery.

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The Global Economic Conditions Survey for the First Quarter of 2021, issued by ACCA and the Institute of Management Accountants (IMA), recorded the highest rise ever in the last decade in global confidence indicators, with the most positive results coming from North America.

The confidence indicators in the Middle East region rose slightly during the first quarter, but activity indicators such as the volume of orders showed a relatively strong increase.

The confidence indicators were supported by a new rise in oil prices this year that touched $ 70 a barrel in March, in addition to the remarkable progress made by vaccination programs in a number of countries in the region, such as the UAE and the Kingdom of Bahrain.

Improved oil revenues and easing restrictions imposed as a result of the epidemic have strengthened the economic recovery.

More clearly, 40% of respondents in last year's survey from the Middle East, Africa and Western Europe regions did not expect a significant economic recovery until the last quarter of this year or even later.

Economic survey

The Global Economic Conditions Report, which is the largest periodic economic survey, in which more than 1,000 senior accountants and financial specialists from all over the world participate, monitored the true size of the global recession resulting from response measures to the emerging coronavirus epidemic, indicating the deterioration of optimism indicators about the global economy since The beginning of the outbreak of the epidemic, and new expectations of an increase in global confidence indicators, thanks to the impact of vaccination programs, incentives and financial facilities.

The first quarter 2021 survey was conducted in March, and its results show the largest jump ever in global confidence indicators since the poll began 10 years ago, and a significant improvement compared to the fourth quarter 2020 poll, which was conducted in December 2020.

The authors of the poll believe that obtaining the highly effective vaccines against "Covid-19" to obtain the necessary regulatory approvals, and then launching vaccination plans in many countries, contributed to providing a lasting solution to the health crisis.

Activity indicators, which include the volume of demand and spending from capital and employment, increased relatively during the first quarter of the year, close to the levels of confidence recorded during the fourth quarter of 2019, before the outbreak of the pandemic.

Poll results

Hanadi Khalifa, Director of Operations for the Middle East, Africa and India at the Institute of Management Accountants, said: “The results of the Global Economic Conditions Survey for the first quarter of 2021 reflect more optimism, compared to the results of the previous survey, as confidence indicators witnessed an unprecedented rise in the history of the survey.

The obtaining of many effective vaccines, the necessary approvals, and their publication have contributed significantly to the improvement of expectations to reduce the (Covid-19) crisis, and the results paint a hopeful picture of achieving further recovery in the global economy during the second half of 2021 ».

Michael Taylor, chief economist at the Association of Chartered Certified Accountants, said: “The global economy witnessed the largest recession of its kind over several decades in 2020, and today it is on its way to a relatively quick recovery.

It is auspicious that the vaccination plans and the ongoing supportive policies are moving forward towards extricating the global economy from the (Covid-19) disaster during this year ».

Referring to concerns about the persistence of inflation rates, Taylor said: “Periods of lockdown, collapse in global demand, and lower commodity prices have led to a near-zero drop in inflation rates in many advanced economies, and a decline elsewhere.

As the features of a world begin to take shape, there is currently debate about expectations of higher inflation rates in the short and medium term.

In the near term, we expect higher costs to lead to a 2% rise in inflation in many cases. ”

The Recovery Path

The Certified Management Accountant, Public Accountant, Deputy Head of Research and Policy Affairs at the Institute of Management Accountants, Raef Lawson, indicated that the current recovery path of the global economy is different from its counterpart in the aftermath of the financial crisis between 2007 and 2009, which led to a long period of weak growth as a result of the trend The private sector needs to rebuild its budgets by boosting savings.

He added: «The current crisis differs from the previous one, in that it arose out of health, not economic, reasons.

At the present time, the global incidence of (Covid-19) infection exceeds the current vaccination rates, which means that the risks remain.

However, activity indicators such as the volume of orders recorded a relatively strong increase in the Middle East and Africa, and permanent changes in the spending pattern are likely to occur as one of the many and long-term economic repercussions as a result of the (Covid-19) crisis. ”

Reliability and volume of orders

The results of the Global Economic Conditions Survey for the first quarter of 2021 reveal an improvement in overall confidence rates and the volume of orders in all parts of the world except for Africa.

Indicators of "fear" related to the exit of customers and suppliers from the market, recorded mixed results in this survey, but remained high compared to the long-term rates, confirming the continuation of the state of severe uncertainty.

In addition, short-term concerns about costs have increased, reflecting rising commodity prices and other costs, coinciding with the global economic recovery.

The fieldwork for the survey was launched between February 26 and March 11, 2021, and was attended by 1004 members of the Association of Certified Public Accountants and the Institute of Management Accountants around the world, including more than 100 financial managers.

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