Expansion Plans of Qatar Businesses Up, But Q3 Optimism Index Moderates: Survey

Doha, July 18 (QNA) - Non-hydrocarbon businesses' expansion plans have improved, 46% respondents say, but the optimism index has moderated to 27 points due to the prevailing uncertainty in the global economy, according to a business optimism index survey for Qatar's third quarter of 2012. This is 10% increase in the respondents' optimism over the second quarter figure of 36% for 2012, but the composite index for the hydrocarbon sector has dropped to four as the outlook for selling prices has fallen significantly, Dun and Bradstreet (D and B) officials said Wednesday at a media conference while announcing the third quarter Business Optimism Index for Qatar. Sponsored by Qatar Financial Centre Authority (QFCA), the D&B Business Optimism Index (BOI) measures the pulse of Qatar's business community by surveying owners and executives of around 500 private companies. A random sample, split into hydrocarbon and non-hydrocarbon sector, is selected from the commercial database for the survey. Commenting on the findings of the survey, QFCA Strategic Development Director Yousuf Al Jaida said, "The overall levels of optimism have fallen given the protracted uncertainty in the global economy and the Euro zone crisis. However, Qatar's GDP growth of 6.9% in the first quarter is high by international standards and its pertinent to note that financial and business services have achieved 7.2% growth." Presenting the details of the survey, D and B South Asia Middle East Senior Manager, Research and Advisory Prashant Kumar said, "The BOI survey for Q3 2012 reveals a drop in optimism levels following the cautious approach adopted by Qatar's business community. The hydrocarbon sector optimism has dropped 16 points to four from 20 points the previous quarter." The drop is due to lower BOI scores for selling prices and profitability expectations. The BOI for level of Selling Prices has slid by 25 points to three in the Q3 as 13% of the respondents anticipate prices will fall while 10% expect prices to rise, the survey reveals. The BOI for Net Profit has dipped by 16 points to eight. From the respondent’s sample, 32% expect that profit levels will not change while 38% anticipate a decrease and the remaining 30% predict an increase. The BOI for Number of Employees has gained two points to 30 from the 28 in the Q2. The composite index for the non-hydrocarbon sector is 27, nine points lower than Q2 and the BOI scores for five of the six parameters have dropped in Q3 compared to Q2 levels. Officials cited the uncertainty surrounding the global economy as the reason. Nevertheless, they were upbeat about Qatar. "Qatar's strategy of diversifying is on track and the findings of the survey remain encouraging for us at the QFC from the financial sector's perspective," said Jaida. Kumar reaffirmed this. "Qatar's GDP Q1 growth of 6.9% was driven by government services (13.9%), transports and communications (12.7%), trade, hotels and restaurants (11.4%), and financial and business services (7.2%). 40% of the respondents in the non-hydrocarbon sector don not anticipate any negative factors to influence business operations," he said and added that this sector would see a growth of 9%. 'It is indicative of longer term confidence that the non-hydrocarbon sector is showing greater signals of business expansion that was the case last quarter," said Jaida and added, "this underlines the continuing opportunities the QFC Authority has to help promote the financial sector in Qatar and the Gulf region." On the factors impacting business in Q3, the overall business environment was ranked as the primary influence on operations by 30% of the respondents. Among other factors which weigh on business optimism outlook, for instance is the impact of currency fluctuations, like India's plummeting Rupee, currently (1 QR = Rs 15.38), which affects trading operations and profitability of Qatari businesses with their Indian counterparts. "The survey does cover foreign exchange fluctuations," said Kumar replying to a Qatar News Agency (QNA) question. "From the total respondents to the survey, 12% identified other factors including the impact of global financial meltdown on regional economies through trade and investments, currency fluctuations and uncertainty in the Euro region." In the oil and gas sector, 38% of the respondents have identified the current business environment in Qatar as a key factor influencing their business operations whereas the same percentage of respondents do not anticipate any negative factors adversely impacting their operations in Q3, the survey shows. The survey for BOI for Q3 was conducted in June 2012, officials said. (QNA)