Qatar economy resilient in face of global economic slow down
Dun & Bradstreet South Asia Middle East (D&B) released today D&B Business Optimism Index for Qatar for Q1 2009 in association with Qatar Financial Centre (QFC) Authority and Al Khalij Commercial Bank (al khaliji).
The D&B Business Optimism Index (BOI) for Q1 2009 was conducted in November 2008 amid virulent crisis in the global financial markets, growing concerns over the declining crude oil prices and deceleration in global economic growth. The sentiments in the region have been hurt by the spill over effects of global financial crisis. However, Qatari economy is expected to do fairly well in these testing times with ample government support to minimise the impact of global economic slowdown. The BOI results further point towards the resilience of the economy in face of the global financial crisis.
Commenting on the overall findings of the BOI, Rajesh Mirchandani CEO of Dun & Bradstreet SAME Ltd. states, “The next quarter expectations are subdued compared to earlier quarters, but remain fairly optimistic. According to the BOI survey, 53% of the business units in the non-hydrocarbon sector are expecting increase in Volume of Sales and Net Profits, indicating that that the demand levels in the economy are likely to stay firm. The hydrocarbon sector is showing signs of cautiousness in light of deep fall in global oil prices which will affect their margins. Overall, the economy is expected to withstand the crisis.”
David Proctor, CEO of al khaliji commented “The vast majority of respondents are confident Qatar can overcome any negative effects from the US and European financial crisis, but businessmen are becoming more cautious. It is noticeable that most businesses say their sales prices will remain flat, rather than increase and more businesses have put their investment and recruitment plans on temporary hold until the situation becomes more clear. The results show the Qatar government and businessmen alike are taking a very balanced and mature approach to the recent market disturbances.”
As identified in earlier quarter indices released by D&B, QFC, and al khaliji, the BOI survey shows that there are continued signs of easing inflationary pressures. The survey shows that 56% of the business units expect no change in their Selling Prices over the next quarter and another 18% expect their Selling Prices to decrease. Real estate prices are likely to ease off with 56% of the units in building, construction & real estate sector expecting no change in their Selling Prices. Ms. Rajni Thakur, Sr. Economist at Dun & Bradstreet comments: “The cooling off of the commodity prices in the global markets and directed policy measures have contributed to curbing in the current inflationary levels. The BOI survey indicates that there are definite signs of continued downward pressures on inflationary levels in the next quarter.”
On the issue of likely impact of the global financial crisis on businesses, the responses show that the business units are divided over the impact of the financial crisis on their operations. Only 37% of the respondents in the non-hydrocarbon sector have shown concern of the impact as against 63% of companies who feel that the crisis is not going to Affect their business. The trade, transport & hotel sector seem to be most resilient with 71% stating that it would not impact their business, followed by the agriculture, manufacturing, water & electricity sector at 68%, and finance, insurance and business services at 61%. The building, construction and real estate sector were the least optimistic with 51% stating that it would not impact their business.
“This was expected to be a crucial survey given continuing economic turmoil around the world, which is impacting some countries in the Gulf. The fact that Qatar’s commercial sector still appears to have a generally positive attitude to the year ahead reflects the strength of the underlying economy and the determination of firms here to persevere with their business plans. It also suggests that such plans have been based on realistic assumptions,” said Shashank Srivastava, Director of Strategy and Planning of the QFC Authority.
Business optimism indices are commonly used to better identify and understand the growth expectations of the business community and its response to current developments within an economy. Issued quarterly, the Business Optimism Index for Qatar is based on an extensive survey conducted amongst the Qatari business community and is one of the most effective ways to keep track of where businesses think the Qatari economy is moving. The next Business Optimism Index on Qatar will be released in April 2009.