Chief executives in MENA remain least optimistic in the world
ABU DHABI, 7 November 2017 – YPO, the premier chief executive leadership organisation in the world, reported today that the YPO Global Pulse Confidence Index, which tracks economic confidence levels among chief executives on a quarterly basis, gained 2.5 points to 53.2 in the Middle East and North Africa (MENA) during the third quarter (3Q 2017).
This slight improvement arrested a sharp decline in confidence to 50.7 in July, its lowest level in the eight-year history of the survey. However, for the second consecutive quarter, chief executives in MENA remain the least confident in the world, and their confidence rating trails the global composite score of 62.4 by 9.2 points. It is likely that low oil prices, reduced production and austerity measures continue to impact economic sentiment.
While the overall picture for the MENA region was slightly more positive, the aggregate score for the oil-producing Gulf Cooperation Council (GCC) countries, which had fallen below the 50-point mark in the previous survey, continued its downward trend, dropping 3.2 points to 46.0.
On the other hand, Lebanon registered an 8.5 point-increase in economic confidence to 54.2, back into positive territory.
“Confidence remains fragile across the region, particularly amongst the GCC countries where the reduction in oil prices continues to have a profound impact,” said Qutub Dadabai, Regional Chair for YPO in the Middle East and North Africa and Managing Director of the Dadabai Holding.
“Chief executives will remain extremely cautious as we move towards the end of the year, keeping a close eye on economic performance indicators and carefully weighing up any unnecessary risk when making decisions.”
Key findings in MENA
Business leaders more confident about prospects for growth
Chief executives in MENA were slightly more optimistic about the prospects for their own organisations over the next 12 months, and the three key indicators of the survey, measuring sales, employment and fixed investment, all registered increases in the third quarter. The YPO Sales Confidence Index edged up 1.0 point to 56.7. Almost half (48%) of respondents expected to increase revenue over the next year, although 19% predicted a decline in turnover. The remaining third (33%) felt sales would stay flat.
There were more marked improvements in outlook when it came to forecasts around hiring and fixed investment. The YPO Employment Confidence Index jumped 4.7 points to 53.3, although there was still a relatively cautious picture, suggesting unemployment will continue to be a challenge in many countries. Only 22% of chief executives predicted an increase in headcount, while 17% expected to reduce staff numbers; most respondents (61%) expected the size of their workforce to remain unchanged.
The YPO Fixed Investment Confidence Index climbed 4.0 points to 58.5. The majority (60%) of business leaders predicted that investment levels would remain flat over the next 12 months, while about a third (30%) expected an increase in investment, and 10% forecasted a reduction in spending.
Economic conditions set to remain tough
Business leaders registered a great deal of concern about the business and economic climate in the short term. More than one-third (36%) of respondents expected economic conditions would deteriorate in the next six months, whilst 38% expected little change in the economic environment. Only a quarter (26%) of chief executives believed that the economic climate would improve in the next six months.
Globally, confidence remained steady at 62.4, now firmly in positive territory for four consecutive surveys, hovering between of 62.0 and 62.5. The United States was the most confident region at 63.5, Canadian confidence also remained positive, declining marginally by 1.1 points to 61.8, and Australasia saw a 3.7-point decline to 63.3. In Europe, the mood remained upbeat, as the European Union (EU) slipped slightly by 1.2 points to 61.8, and non-EU Europe edged down 1.7 points to 58.6. In Asia, confidence rose 1.3 points to 62.8, driven by an 8.8-point leap in China, and improved confidence in the Association of Southeast Asian Nations (ASEAN).
Elsewhere, confidence in Latin America jumped 2.8 points to 62.0, largely driven by Brazil’s 8-point hike in confidence. In Africa, the confidence edged up 1.2 points to 57.5, yet it remains the second least-confident region in the world.
YPO Global Pulse Confidence Index
The quarterly electronic survey, conducted in the first two weeks of October 2017, gathered answers from 925 YPO chief executive officers across the globe, including 53 in MENA. Go here for more information about the survey methodology and to view the results from around the world.
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