Business confidence in the Middle East continues to fall as the global economy is facing a period of volatility and major readjustments in the second quarter of 2015, according to a new study, AAP reported.
The slight optimism was due to a temporary reprieve in oil prices during the spring, but was a short-lived flame of hope for the Organization of Petroleum Exporting Countries members, which was quickly extinguished by the prospect of Iran re-entering the market within a year.
The Global Economic Conditions Survey was organized by the Association of Chartered Certified Accountants and the Institute of Management Accountants.
According to the survey, the global economy is facing a period of volatility and major readjustments.
More than any other region, firms in the Middle East began looking for opportunities in new markets in the last three months.
About 43% of them took this approach, while over half of firms (53%) sought ways of reducing costs during this difficult period, said respondents to the survey.
Qatar has continued to boom, owing to large reserves of natural gas rather than oil, as well as ongoing investments ahead of the 2022 FIFA World Cup.
While Qatar is expected to record strong growth of 7.1% this year, the IMF revised its overall forecast for the region down by a percentage point in its April 2015 World Economic Outlook.
The second quarter of 2015 saw an abortive rise in oil prices, several expected and unexpected rate cuts by central banks, a rebound in western consumer sentiment and a stock market crash in China. These events led to business confidence leveling off in the second quarter of 2015 following six months of improvement, according to GECS.
VAT in UAE
The possible introduction of value added tax and corporation tax in the United Arab Emirates is unlikely to deter international investors, an analyst has said.
The UAE is hoping to finally complete drafting laws for VAT by the third quarter of 2015, after mulling the plan for several years, officials have said.
The country, expected to post its first budget deficit since 2009 this year, has been hit hard by the recent drop in oil prices.
The UAE, along with the (Persian) Gulf Cooperation Council countries, are now seeking to diversify away from oil and are currently in the process of reaching a common agreement for the implementation of VAT.
Once a decision to impose VAT is made in the UAE, the public will be given at least 18 months to prepare, the finance ministry has said.
