Highlights:

• The Business Optimism Index for the hydrocarbon sector has improved significantly to 46 in Q3 from 12 in Q2 due largely to an improvement in selling price outlook. Indeed, there were no respondents in the survey that anticipated price declines which is significant considering the survey was conducted during a period when the oil price was experiencing some volatility and had fallen by 20% in prior weeks.
• The  Business Optimism Index for the non-hydrocarbon sector  has improved to 39 in Q3 from 27 in Q2 reflecting strong demand and economic fundamentals
• The Transport & Communications Sector leads the BOI survey in sales, new orders and profitability outlook; the sector index has jumped to 46 in Q3 from 17 in Q2.

Doha:  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 Q3 2010.

Background to the Survey
The survey for the Business Optimism Index for Q3 2010 was conducted in June, amidst an environment of volatility in crude oil prices with uncertainties about demand re-emerging due to concerns over the impact of Europe’s debt crisis and the contagion risk. Qatar’s economy proved its resilience against the financial crisis of 2008-09, helped by strong growth in its natural gas sector which registered a growth of 15% in real terms. Higher oil prices in 2010, compared to 2009 levels, have placed the government in a good position and the subsequent fiscal surplus will be utilized to supplement aggregate demand in the face of a protracted global recovery. 

The Qatar Statistics Authority reported that in real terms the economy grew 8.7% in 2009 with the non-hydrocarbon sector growing 9.6%. The IMF predicts a real GDP growth rate of 18.5% in the current year, underpinned by rising gas output and strong non-hydrocarbon growth. Expansion in the natural gas sector will also help many downstream sectors which in turn will drive manufacturing activity. Diversification into the non oil & gas sector is an important government policy and recently a QAR 10 billion bond sale was undertaken to fund various infrastructure projects and develop the country’s domestic debt market.

Commenting on the findings of the survey Phil Strange, CFO of Dun and Bradstreet South Asia Middle East Ltd. said: 

‘Despite the continuing debt troubles of the Euro Zone which have given rise to renewed concerns of sluggish global economic growth, or potentially a double dip recession, Qatari businesses continue to have an optimistic outlook. Buoyed by a strong hydrocarbon sector and continued investments in key infrastructure projects, the Qatari economy is expected to remain robust.’  
 

Hydrocarbon Sector
The D&B BOI survey reveals that Qatar’s hydrocarbon sector optimism has improved significantly in the third quarter primarily due to a higher BOI score for Level of Selling Prices. The overall BOI composite score for the sector has increased to 46 as against 12 in the second quarter, with Level of Selling Prices witnessing a 71 points jump from the last quarter’s level of -8. This suggests that the oil and gas price in the international commodities market was oversold and most industry players expect them to strengthen in the third quarter. This has also lifted the Net Profits expectations of the industry players, the BOI for which is recorded at 25 as against 15 in the last quarter. The BOI for Number of Employees has however posted a dip, dropping from 48 in Q2 to 35 in the third quarter.

Non hydrocarbon Sector
The survey for Q3 2010 reveals that optimism levels have picked up for all six parameters in the non-hydrocarbon sector. Survey participants anticipate strong domestic demand in the third quarter as the BOI for Volume of Sales parameter has increased by 8 points to 49 supported by New Orders, where the BOI has gone up by 10 points to 49.  The BOI for Selling Prices has also shown an improvement rising by 12 points to 19 over the same time period. Supported by an increase in outlook for sales and prices, the Net Profits parameter has posted a strong comeback with a gain of 19 points to 46 in Q3.

With expectations of rising economic activity, respondents’ optimism with respect to hiring posted a robust gain over the previous quarter. The BOI for the Number of Employees parameter has increased by 14 points to 34 in Q3. Reflecting the growing optimism with respect to domestic demand, more businesses plan on holding higher levels of inventories; the BOI for the Level of Stock parameter has registered a 28 points jump to 33 in Q3.

Factors Impacting Business
Factors impacting business remains fairly stable in Q3 versus previous quarter. Raw material costs remain the most important business concern in Q3; 48% of the non-hydrocarbon respondents have cited it as the key business factor which would impact their businesses. Availability of finance as a factor impacting business continues to be an important concern: 29% of the survey participants anticipate that it will affect them. As far as investment is concerned   31% of firms plan spend for business expansion purposes.

In the hydrocarbon sector project delays remain the top concern for the majority of respondents with 50% citing this as their major operational challenge.

Shashank Srivastava, Acting CEO of the Qatar Financial Center Authority said:

 "Given that this survey was conducted as the leading economic indicators globally are showing signs of strain amidst increasing fears of a ‘double-dip’ , it is particularly encouraging that our latest index concludes that optimism levels amongst Qatar's business community increased within the last quarter. While the significant increase in optimism for the hydrocarbon sector stands out, the fact that both optimism and overall expectations of rising economic activity grew across all measured non-hydrocarbon parameters is strong testimony to the resilience of the business environment and the robust economic fundamentals in Qatar." 

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. The next Business Optimism Index for Qatar will be released in October 2010.

For further information:
Press Contacts:
Dun and Bradstreet South Asia Middle East Ltd.
Dheeraj Shahdadpuri
Senior Analyst
Tel: +971-4-3695700
Email: shahdadpurid@dnbsame.com
www.dnbsame.com

Qatar Financial Centre Authority
Stephen Carriere
Head of Marketing and Corporate Communications
Qatar Financial Centre Authority
Tel: +974 496 7784 - email: s.carriere@qfc.com.qa
www.qfc.com.qa

About Dun and Bradstreet
Dun and Bradstreet is the world’s premier financial data and business information provider, and widely recognized as the world’s leading business knowledge provider.  Established in 1841, the company owns and maintains the world’s largest commercial database containing more than 140 million business records, and provides business information solutions to the world’s business community.  D&B is ranked no. 1 in the Fortune list of America's Most Admired Companies 2007 within the Financial Data Services industry. D&B is ranked first in the areas of quality of products/services, financial soundness, long-term investment, quality of management and use of corporate assets.
Dun and Bradstreet South Asia Middle East (D&B) was established in 2003 and offers a suite of information solutions across the region and our services are used extensively by Banks, Financial Institutions, Government Departments, Multinationals, Corporate Entities, Small and Medium sized Enterprises, Exporters and Importers.

About QFC
The Qatar Financial Centre (QFC) is a financial and business centre established by the Government of Qatar and located in Doha. It has been designed to attract international financial services institutions and major multi-national corporations and to encourage participation in the growing market for financial services in Qatar and elsewhere in the region. The QFC operates to international standards and provides a first class legal and business infrastructure for those operating within the QFC. The QFC was created by Qatar Law No. (7) and has been open for business since 1 May 2005.

QFC Authority
The QFC Authority is the commercial, administrative and legislative body responsible for driving the commercial strategy of the QFC and for developing relationships with the global corporate community and other key institutions both within and outside of Qatar.