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Qatar Business Optimism Index Q3 2009
Presented by Presented by Dun & BradstreetDun & BradstreetQatar Financial Centre (QFC) Authority Qatar Financial Centre (QFC) Authority
• The D&B Business Optimism Index is recognized world over as an
indicator which ascertains the pulse of the business community
• Provides insight into the short-term outlook of business units on
sales, profit growth, investment etc
• Provides analysis of major trends, outlook and issues concerning
the business units
Business Optimism Index
• Sample of business units representing Qatar’s economy was selected
• 500 business owners and senior executives across business units were
surveyed
• Survey conducted during June 2009 for the 3rd quarter of 2009
• Respondents were questioned about their expectations on relevant
business parameters
• Survey also captured respondent feedback on current business
conditions
Survey
Introducing Composite Business Index
• The Composite Business Index is calculated separately for the hydrocarbon and non hydrocarbon sector
• Weights are assigned to each of the parameters and the base period is chosen to calculate the index
• For the non hydrocarbon sector, the Composite Index captures the aggregate behavior of six individual indices
• For the hydrocarbon sector, the Index takes into account the aggregate behavior of three individual indices
World Economic Outlook
• IMF revises world economic growth downwards to -1.4% in 2009, recovery expected
in 2010 with 2.5% growth
• GDP of United States expected to contract by 2.6% in year 2009, its first since 1991
• Recent emergence of green shoots have boosted sentiments all across the world;
stock markets shows recovery from their multi-year lows
• GCC growth to rebound to 4.2% in 2010
Real GDP Growth (%) World Stock markets
Economy of Qatar
• At QAR 70.9bn, Qatar’s
Nominal GDP is 17.5% lower
than Q1 2008, but is
predicted to recover quickly
• Steep decline in hydrocarbon
prices, lead to 40% decline in
the sector GDP in Q1 2009
over Q1 2008
Quarterly Sector GDP (QAR billion)
Source: Qatar statistics quarterly
Business Optimism Indices
The Composite Business Optimism Index for the non-
hydrocarbon sector stands at 70.40
Business Optimism Indices Trend
7882
41
9
34
0
20
40
60
80
100
Q3 08 Q4 08 Q1 09 Q2 09 Q309
Inde
x
Volume of Sales
76
63
40
19
37
0
20
40
60
80
100
Q3 08 Q4 08 Q1 09 Q2 09 Q309In
dex
New Orders
66 74
37
326
0
20
40
60
80
100
Q3 08 Q4 08 Q1 09 Q2 09 Q309
Inde
x
Net Profits
59
52
8
-18-4
-20
0
20
40
60
80
100
Q3 08 Q4 08 Q1 09 Q2 09 Q309
Inde
x
Level of Selling Prices
66
6042
24
120
20
40
60
80
100
Q3 08 Q4 08 Q1 09 Q2 09 Q309
Inde
x
Number of Employees
51 61
131
23
0
20
40
60
80
100
Q3 08 Q4 08 Q1 09 Q2 09 Q309
Inde
x
Level of Stock
Manufacturing Sector
• The Global Manufacturing Purchasing Managers’ Index stands at 46.9 in June
• 61% of companies expect no change in selling price
• Current employment levels to be maintained by 79% of companies
Global Manufacturing Purchasing Managers’ Index
Source: J P Morgan and market economics in association with ISM and IFPSM
BOI - Manufacturing SectorGDP
8.3%
Construction Sector
• Construction sector worldwide is expected to recover modestly in 2010 due to Governments’
efforts to boost infrastructure spending
• Qatar’s construction sector is showing growing optimism about new orders and profitability
due to significant Government support
• Selling prices are expected to fall due to lower material costs
Infrastructure construction growth 2008-13Compound annual growth (%)
BOI – Construction Sector GDP
4.9%
Trade & Hospitality Sector
• World exports are expected to decline by 25% in year 2009 due to slowdown
in demand
• Due to seasonal variations, the trade & hospitality sector in Qatar is likely to
face some pressure
BOI – Trade & Hospitality sectorGDP
3.6%
Logistics & Communication Sector
• Global transport sector has been hit by a sharp decline in global trade volumes;
recovery expected in 2010
• 58% of the respondents are optimistic on receiving new orders
• Higher net profits are also expected by 48% of the companies in the third quarter
BOI – Logistics & Comm. sectorGDP
3.3%
Finance and Business Services Sector
• The Global Services PMI for the month of May stands at 43.2
• Sector optimistic on volume of sales and new orders with 50% and 53% of
the respondents respectively expecting higher numbers
BOI – Finance & BusinessServices sector
GDP9.9%
Oil & Gas sector
• 39% of the firms expect selling prices to fall, 22% anticipate a rise
• The Composite Business Optimism Index stands at 52.13
GDP
61.7%
Other Key Highlights
•Trade, logistics & communication sector most concerned about availability of finance
•34% of companies in the non hydrocarbon sector to increase investment in business expansion; 25% have no investment plans
•Internal financing is preferred by 53% and 68% of the respondents in the non hydrocarbon and hydrocarbon sector respectively
•61% of companies in the hydrocarbon sector facing project delays
•Majority of the companies are expecting the global economy to start recovering by next year
Conclusion
• With recent signs of global economic revival, the demand level in Qatar is expected to increase; Manufacturing sector most optimistic
• Qatar’s construction industry to get support from Government’s budget allocation which emphasizes on infrastructure development
• Activity in finance & business services sector is expected to improve with signs of increased liquidity in the international markets
• Downward pressure on prices of goods and services to subside. Inflation edged up 0.6% in May (April 0.2%)
• Hydrocarbon sector uncertain on recent crude price rally as demand is expected to remain weak in the medium term.
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