Doha: Qatar’s Business Optimism Index (BOI) for the second quarter of 2011 has been lowered, according to a survey by 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 Q2 2011.
Commenting on the findings of the survey Phil Strange, D&B CFO, said: “It comes as no surprise to see the optimism levels of businesses in Qatar decline in this Q2 2011 survey. The backdrop to the survey was one of political unrest in a number of Middle Eastern countries, the unfolding of the terrible events in Japan and continued Eurozone sovereign debt worries.”
“The non-hydrocarbon sector, whilst registering a 19 drop to 42, is still showing strong optimism and in fact remains more optimistic than any of the 2010 readings in the index; demonstrating strong resilience in the face of the negative regional and global factors that have recently occurred. The 29 point fall in the hydrocarbon sector to 1 is perhaps a little surprising given the fact that supply fears owing to Middle Eastern tensions is driving the oil price so strongly up.”
The D&B BOI survey reveals that 60 percent of the respondents in the hydrocarbon sector predict that prices will remain at current levels in Q2 2011. 25 percent expect prices to go up while 15 percent expect a decline. The BOI for Level of Selling Prices stands at 10, and is 15 points lower than the score in the previous quarter. This is because prices are expected to remain at current levels with a possible increase if the situation in the Middle East worsens.
As for the non-hydrocarbon sector, the BOI survey shows that the composite index for the non-hydrocarbon sector stands at 42, which is 19 points lower than Q1 2011, as businesses demonstrate caution across the Middle East and move into ‘wait and see’ mode.
Despite the dip, optimism levels are still robust, with the composite index being higher than the scores in all four quarters of 2010. The global economic recovery is continuing and crude prices are at two and a half year highs. However, the emergence of risk factors to this scenario has dampened business sentiment for the short term. The Qatar Exchange index lost over nine percent of its value during February amid high volatility and risk aversion in the market. The stock market has however trended upwards during March as positive corporate earnings data brought investors back to the market.
Among the issues expected to adversely affect operations of the non-hydrocarbon companies in the second quarter of 2011, availability of finance has been ranked by 25 percent of businesses as the primary influence on their business. In Q2 2011, availability of skilled labour is the second most important issue which is likely to influence business operations. Inflationary pressures are slowly building up in the economy and are a key concern for 16 percent of the respondents.