Qatar: Overall business sentiments improve in Q4 2009 reflecting the improvement in global markets
Dun & Bradstreet South Asia Middle East Ltd (D&B) in association with Qatar Financial Centre (QFC) Authority released the D&B Business Optimism Index for Qatar for Q4 2009.
The survey for D&B Business Optimism Index (BOI) for Q4 2009 was conducted in the month of October amidst increasing signs that the global economy is on a path of recovery. The improvement is quite substantial when compared to the same period last year when economies around the world were at the brink of a collapse. The IMF is now more confident on the growth prospects of the world economy. It believes that the measures taken by governments have proven to be successful in limiting the free fall witnessed last year and it expects that the global economic growth will pick up momentum in the coming few months. Subsequently, the global GDP growth estimates for the next year have also been revised upwards to 3.1% as compared to the previous estimate of 2.5%. Although the global economy is still far from a full-fledged recovery, the improvement seen over the last year’s downfall has restored some of the lost confidence back into the financial system. Investors are slowly returning to the markets to take advantage of the distressed prices of various assets which had taken substantial beating when the crisis initially unfolded. Oil, which serves as a lifeline for the Gulf nations, has seen a more than 100% jump in its prices since last December when it was trading below US$ 40 per barrel. This has been one of the leading confidence boosters for the region in the recent months and will continue to be a major catalyst as the global economy steadily recovers from one of its worst downturns.
With the recent signs of commencement of global economic recovery, the optimism levels in Qatar have steadily shown improvement from the last quarter. Commenting on the findings of the survey, CFO of Dun and Bradstreet South Asia Middle East Ltd, Mr. Phil Strange states, “The findings of the Qatar BOI echo the positive sentiments felt world over with the expectations of recovery from the economic crisis. Business Confidence is seen returning to the Qatari economy with most sectors showing an increase in their order books. Qatar is moving in the right direction and could look forward to a consistent in growth in the New Year”. The BOI survey for Q4 reveals a boost in business sentiment across all major sectors of the economy except for the manufacturing sector. In line with the picking up of the global economic activity, non-hydrocarbon sector respondents have displayed a rise in expectation of Sales and Number of Employees. Among the five sectors surveyed, the construction sector is most optimistic with respect to Sales Volumes, Profitability, Level of Selling Prices, Level of Stock and Number of Employees. However, the sector is not optimistic about the New Orders. In line with the rising oil prices in the international markets, the hydrocarbon sector has shown a significant improvement in confidence for the selling prices and profitability.
Shashank Srivastava, Strategy Director of Qatar Financial Center Authority said “Anecdotally, we have detected a pickup in business sentiment echoing the survey results. This is reflected in the increase of interest among regional and international firms in exploring the opportunities to operate in the local market or to use Qatar as a regional platform. We believe this survey mirrors a greater optimism in firms now considering their next steps towards setting up in the region or in expanding their operations specifically into Qatar.”
Qatar’s business community continues to be concerned about cost of raw materials, with 41% of the respondents citing it as the key challenge for Q4. Majority of businesses expect borrowing conditions to improve in Q4, as also reflected by 42% of the non-hydrocarbon respondents planning to invest in business expansion in the current quarter. In the hydrocarbon sector, project delays have been cited by the respondents as a key concern.
Business optimism indices are commonly used to get a better understanding of the growth expectations of the business community and its response to current developments within an economy. Issued quarterly, the D& B’s Business Optimism Index for Qatar is based on an extensive survey conducted amongst the Qatari business community. This is one of the leading ways to keep track of where businesses think the Qatari economy is moving. The next Business Optimism Index for Qatar will be released in January 2010.