World Economy

(P)GCC Faces Mounting Challenges

 (P)GCC Faces Mounting Challenges  (P)GCC Faces Mounting Challenges

The outlook for the economy in the (Persian) Gulf Cooperation Council region remains uncertain this year, as the states continue to deal with challenges, according to a new study.

In the sixth annual Middle East Societies Market Sentiment survey, investment professionals in the Middle East and North Africa were asked about a number of economic issues facing the region today, Gulf News reported.

They highlighted that low oil prices, geo-political instability and lower expenditures will remain the most important concerns this year. “Debt raising activities” are forecast to increase, while the stock markets in Bahrain and Saudi Arabia are likely to face a challenging period, although Dubai is expected to fare better. Survey respondents also highlighted the urgent need for the regional economies to diversify from oil revenues.

In the employment front, there are less jobs expected for workers in the finance industry. Among businesses, consolidation is a theme to watch out for this year, although corporates are still likely to post some growth. Rising inflation and cost of doing business are a concern for some professionals, especially with the introduction of the value-added tax.

The results of the survey, conducted by CFA Institute among its 117 members last month, indicate that investment professionals in Mena have become less confident compared to their peers around the world.

“The (P)GCC (Saudi Arabia, Kuwait, UAE, Qatar, Bahrain, and Oman) states are seeing increasing challenges, hence it is reflected in the results of the annual CFA Middle East Societies Market Sentiment survey,” said Amer Khansaheb, CFA president of CFA Society Emirates.

“We are entering a unique period in the (P)GCC’s economic cycle, where dependence on oil revenue and government expenditure will decrease and we expect to see more strategies in place to create more diversified source of revenue.”

CFA is an international organization of investment professionals, with more than 136,200 members in 145 countries and territories.

Among those surveyed in the region, the “overwhelming majority”, or about 82%, of the respondents said they foresee an increase in debt raising activities.

A significant number (64%) gave the most negative outlook to the equity markets in Bahrain and Saudi Arabia. Dubai’s equity market, on the other hand, is forecast to fare best.

About seven in ten (71%) feel that the biggest issue for investment management professionals in the region will be oil prices.