GCC experiencing shift from austerity period to early stage recovery: ICAEW


Panellists at ICAEW’s corporate finance faculty roundtable

Fiscal reforms, new economic visions and rising oil prices are expected to take the Gulf Cooperation Council (GCC) economies into a recovery path, according to the Institute of Chartered Accountants of England and Wales (ICAEW). A recently concluded ICAEW meeting said the GCC market is currently experiencing a shift from an austerity period to an early stage recovery. All the much-needed austerity measures and economic visions set by the GCC governments are now leading the recovery of their respective economies, it said.

The panellists at the meeting held that the GCC governments are no longer relying on oil as the primary driving force of the economy, but rather as a means of sustainable long-term economic growth. “The GCC governments were very progressive and quick in implementing the needed economic reforms. A tremendous job has been done in a short term. However, the most important period is now, as oil prices are rising,” said Michael Armstrong, ICAEW Regional Director for the Middle East, Africa and South Asia (MEASA). It’s very important for the GCC governments not to be complacent but to maintain the path of fiscal reforms and fiscal adjustment that they have started in order to achieve sustainable economic growth, he said.

In terms of Mergers and Acquisitions (M&A) deals, the meet said the region’s private equity (PE) industry is fairly new and young but this doesn’t mean PE firms should ignore corporate governance or transparency. Both are fundamental elements to attract foreign investors and build trust in the region’s PE industry. Highlighting that the GCC is a niche market for foreign investors; it said “Attracting more foreign investors would require higher geopolitical stability and reduction in the cost of doing business.” The meeting said raising money in the region has been facing difficulties as local investors are looking outwards to more developed markets. The top markets for investors are the United States, Europe, China and India.

Sources and photo-credits: Gulf Times