Qatar Business Optimism Survey Q1 2010
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 December 2009 for the 1st quarter of 2010
• Respondents are asked questions about their expectations on relevant
business parameters
• Survey also captures respondent feedback on current business
conditions
Survey
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
• Global economic recovery led by emerging markets such as BRIC countries
• US economy expanded while Euro zone & UK posted negative growth, if at a lesser
annual rate of decline
• Global Manufacturing PMI indicates renewed expansion across all major economies
Real GDP Growth Q3 2009 (yoy) Manufacturing PMI December 2009
2.21.3
-4.1-4.8 -5.1
8.97.9
-1.2
-6
-4
-2
0
2
4
6
8
10
US
Japan
Euro
zone
Germ
any
UK
Chin
a
India
Bra
zil
%55.9
53.8
51.6
52.7
56.155.6
55
54.1
49
50
51
52
53
54
55
56
57
US
Japa
n
Euro
zone
Ger
man
y UK
Chi
na
Indi
a
Glo
bal
14.7 17.326.5
-1
4.711.3
-41.7-48.4
-42.7
10
-16.2
-28.3
-0.2
-7.5-2.1 -5.5
-60
-40
-20
0
20
40
Oil Gas Manfact Constr Trade,Rest &Hotels
Trans &Comm
Fin, I ns,Real Est& BusSer
TotalGDP
%
GDP Q3 2009 (q/q) GDP Q3 2009 (y/y)
Economy of Qatar
• Qatar’s nominal GDP grew
11.3% sequentially in Q3 2009,
indicating early stages of
recovery
• Recovery in oil prices and
output a major factor behind
growth revival
• Manufacturing posted strongest
growth amongst all sectors
Gross Domestic Product - Q3 2009
Crude oil production
730
740
750
760
770
780
790
800
810
820
Q4 08 Q1 09 Q2 09 Q3 09 Sep-09 Oct-09 Nov-09
'00
0 b
pd
Composite Business Optimism Indices
• Composite BOI for Non Hydrocarbon sector sees a minor dip
• Higher energy prices in the international markets leads to improved outlook for the Hydrocarbon sector
Business Optimism Trends – Non Hydrocarbon Sector
63
47
15
50
11
4544
14
1
32
20
3338
50
9
32
19 20
0
10
20
30
40
50
60
70
Volume of Sales
New Orders Level of Selling Prices
Net Profits Number of Employees
Level of Stock
Inde
x
Q3 2009 Q4 2009 Q1 2010
33.235 35.8
37.3
46.9
50
53.1 5354.4 55
45.3
41.8
53.7
30
35
40
45
50
55
Dec
-08
Jan-
09
Feb
-09
Mar
-09
Apr
-09
May
-09
Jun-
09
Jul-0
9
Aug
-09
Sep
-09
Oct
-09
Nov
-09
Dec
-09
Manufacturing Sector
• Global manufacturing activity expands further, December reading at 44-month high
• Qatar manufacturing sector outlook for Q1 mixed
• Lower expectations regarding sales and inventory suggests current demand has
moderated
• However, increased optimism about new orders signals expectations of
future improvement
Global Manufacturing Purchasing Managers’ Index
Source: J P Morgan and market economics in association with ISM and IFPSM
BOI - Manufacturing Sector
GDP
8.3%
19 21
-19
14
4 4
71
38
16
59
40
58
27 30
-7
33
169
-30
-20
-10
0
10
20
30
40
50
60
70
80
Volume of Sales
New Orders Level of Selling Prices
Net Profits Number of Employees
Level of Stock
Inde
x
Q3 2009 Q4 2009 Q1 2010
GDP
4.9%
Construction Sector
• Global construction sector currently driven by infrastructure spending as commercial
property undergoes correction
• Qatar construction firms less optimistic in Q1 amid softer sales outlook
• More business units expect prices to fall than rise
Residential Construction Outlook 2008-13Compound annual growth (%)
BOI – Construction Sector
1.1
5.1
2.6 2.2 1.9
-0.5
6.9
-3.3
-4
-2
0
2
4
6
8
World NonJapanAsia
Asia MiddleEast &Africa
SouthAmerica
EasternEurope
NorthAmerica
WesternEurope
Source: Global I nsight
13
31
-9
-3
-76
43
3
15
28
16
35
2420
-5
20 19
8
-20
-10
0
10
20
30
40
50
Volume of Sales
New Orders Level of Selling Prices
Net Profits Number of Employees
Level of Stock
Ind
ex
Q3 2009 Q4 2009 Q1 2010
Trade & Hospitality Sector
• Global wholesale/retail trade & hospitality sector is expected to pick up in 2010, but
recovery will be slow as consumers confidence remains weak
• Qatar Q1 outlook mixed with widespread concerns about profitability
• New orders points towards sustained recovery in demand going forward in 2010
BOI – Trade & Hospitality sectorGDP
3.3%
24
45
0
2522
31
-12 -5
232826
35
-163
15
-20
-10
0
10
20
30
40
50
Volume of Sales
New Orders Level of Selling Prices
Net Profits Number of Employees
Ind
ex
Q3 2009 Q4 2009 Q1 2010
Logistics & Communication Sector
• Global transport & communications sector expected to witness gradual recovery in 2010
• Rising concerns about profits as weak demand puts downward pressure on prices
• Half of respondents expect an increase in new orders as global trading activity resumes
BOI – Transport & Comm. sector
GDP3.3%
33 35
-10
2521
50 50
4
37
22
55
26
10
41
24
-20
-10
0
10
20
30
40
50
60
Volume of Sales
New Orders Level of Selling Prices
Net Profits Number of Employees
Inde
x
Q3 2009 Q4 2009 Q1 2009
Finance and Business Services Sector
• The Global Services PMI recovery has leveled out following extended recovery
• Qatar service sector bullish about current demand with increased optimism regarding
sales, prices and profit
BOI – Finance & Business Services sectorGDP9.9%
Global Services Purchasing Managers' Index
39.643
38.6 41.5 43.7 43.247.4 46.5
50.5 52.2 53 50.3 52.1
0
10
20
30
40
50
60
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Source: J P Morgan and Markit Economics in association with ISM and IFPSM
Oil & Gas sector
• Half of surveyed firms in the Hydrocarbon sector expect selling prices to increase
• 48% expect to add new employees during Q1
GDP
61.7%OPEC Monthly Basket Price
50.2
69.56
76.2967.17
74.0172.6771.35
64.59
55.8141.41
45.7841.54
38.6
0
10
20
30
40
50
60
70
80
90
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Other Key Highlights
•Availability of finance remains a key concern for many businesses in Qatar, reflecting global financial crisis aftermath •However, 42% of respondents expect borrowing conditions to improve during the quarter, only 5% expect a deterioration
•Manufacturing sector facing pressure due to higher raw materials cost
•More than one third of companies in the non hydrocarbon sector plan to invest in business expansion in Q1
•60% of companies in the hydrocarbon sector facing project delays
Conclusion
• Business Optimism levels in Qatar suffer a minor dip
• Majority of Non hydrocarbon sectors expect an increase in New Orders
• Qatar’s manufacturing industry shows a drop in net additional optimism with respect to sales, employees and stocks
• Improving liquidity in the international financial markets lifts optimism levels in Finance & business services sector
• Hydrocarbon sector optimism levels improve further due to higher crude prices
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