Optimism among CFOs in the Middle East fell to its lowest level for several years, with only 26% reporting positive prospects for their company, Deloitte said in a recent report, 'Global CFO signals'.
This is down from 47% in the previous survey, done just before oil prices fell last year.
Optimism has also fallen in the Gulf nations, Deloitte said.
"Traditionally, CFO perceptions are divided in the region with Gulf nations reporting higher levels of optimism compared to the surrounding North African and Levant countries. However, Gulf nations did not remain unscathed from market conditions: risk optimism in the United Arab Emirates dropped to 47% from 61% in the previous survey," the report said.
Risk appetite also fell, with only 33% of Middle East CFOs saying that this is a good time to take greater risk onto the balance sheet. Cost reduction and improved internal economics are favoured, Deloitte said.
Predictions of private equity activity and M&A levels over the next 12 months have decreased from last year, it said.
However, 66% of Middle East CFOs do expect oil prices to rise within the next year, it said.
"In response to challenging market conditions and decreased risk appetite, Middle East CFOs appear to have concentrated their efforts toward performing as financial stewards and operators of their organisations rather than as strategists or catalysts," said James Babb, a partner in Deloitte Middle East.
"The pivot is evident as high-priority business strategies over the next 12 months aim to protect and preserve the organisation’s financial position via cost reduction, organic growth and increased cash flow," Babb said.
"Maintaining a focus on cost reduction and improving internal economics appears to be a prevailing position. As optimism and risk appetite seem to be directly correlated with energy prices, maintaining a holding position to weather the storm appears to be a popular strategy," he said.
Internationally, the picture is more mixed than usual, varying country by country, Deloitte said.
"There have been several notable global economic tremors in the last few months," Deloitte said. "However ... CFO optimism seems increasingly tied to their own country's or region's situation."
Middle East expert Sachin Kerur of Pinsent Masons, the law form behind Out-Law.com said: "It would be odd if short-term optimism in the region had not taken a knock in light of oil price falls and turbulence in the international capital markets. However, when looking at the regional picture with a steadier eye, there is no reason to believe that key domestic development plans in the Gulf states will not go ahead since the Gulf states can access the dollar reserves they have accumulated during the era of high energy prices."
"Diversification of the economies of the region is still the key factor and indeed will become more pronounced so well-run, streamlined companies that have access to human and financial capital to support such diversification will stand to benefit. The fall in optimism could be arrested in those circumstances," Kerur said.
Earlier this month, the International Energy Agency said that global demand for oil is expected to grow by 1.6 million barrels a day (mb/d), the fastest pace for five years.