Qatar: Sentiments show marked improvement
Dun & Bradstreet South Asia Middle East (D&B) in association with Qatar Financial Centre (QFC) Authority today released the D&B Business Optimism Index for Qatar for Q3 2009.
The survey for D&B Business Optimism Index (BOI) for Q3 2009 was conducted in the month of June against the backdrop of crude prices rallying to their seven month high in the range of US$70 per barrel with expectations of rising demand for oil and signs that the global economy has started to come out of recession. According to the IMF, the Qatari economy is estimated to register one of the highest growth rates in the world in the current year, a real GDP growth rate of 18%, primarily backed by the natural gas segment of the hydrocarbon sector. The Government’s 2009-10 expansionary budget of QAR 94.5 bln has made large allocations for strategic infrastructure development projects to help the Qatari economy maintain its growth momentum. The BOI report for the third quarter further reveals that the sentiments in Qatar are improving on the back of growing expectations of a global economic recovery.
Commenting on the findings of the survey, CEO of Dun and Bradstreet South Asia Middle East Ltd, Mr. Rajesh Mirchandani states, ‘’The world economy has shown signs of stabilizing in recent months indicating that the measures taken by governments across the world have started bringing benefits. In line with global events, the Qatari business community shows a positive outlook for the third quarter and is expecting the demand levels to improve. This quarter reveals a significant improvement in the number of business units expecting increase in their sales volume. Also the downward pressure on prices seen in the last quarters is also seems to be subsiding. However, availability of finance remains a key cause of concern for a large number of businesses’’.
Also Shashank Srivastava, Director Strategy and Planning Department on Qatar Financial Centre Authority said “Based on the third quarter results, the majority of Qatar’s business community seem to anticipate that a global economic recovery is still a bit further off, starting in 2010. This reflects our view. However, it is interesting to note that those surveyed specifically working in Finance, Insurance and Real Estate are much more bullish, with half expecting the recovery to start this year.”
The sentiments in the hydrocarbon sector seem to be mixed. The BOI survey reveals that companies in the hydrocarbon sector are expecting oil prices to weaken as the current high prices do not seem to be backed by a real improvement in the demand for oil. As such, the BOI for level of selling prices stands at -17; a 10 points drop from the Q2 level of -7. However, firms are more optimistic with regard to hiring plans with the BOI for number of employees standing at 14 as compared to -11 in the last quarter. 61% of the respondents have referred to possible project delays as a key concern facing the industry in the third quarter.
QFC Comments: As for business expectations regarding the global recession, 51% of the respondents in the non-hydrocarbon sector expect the global economic recovery to commence next year. 29% of the businesses are more optimistic and expect the global economic recovery to begin sometime this year. 8% of the companies are uncertain about the time frame for revival of global economic growth.
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 November 2009.