Doha, 24 October 2011

Dun & Bradstreet South Asia Middle East Ltd (D&B) in association with Qatar Financial Centre Authority has released the D&B Business Optimism Index for Qatar for Q4 2011

Key Highlights:

• The Composite Index for the non-hydrocarbon sector has improved to 45 in Q4 2011, helped by a strong economy and government stimulus measures
• All six parameters of the non-hydrocarbon sector have posted gains
• The Composite Index for the hydrocarbon sector moderates to 20

Background to the Survey

The survey for the Business Optimism Index for Q4 2011 was conducted in September 2011, when most forecasts were for a slowdown in global economic growth for 2011 and 2012. After the recession in 2009, the global economy grew at 3.1% in 2010 and posted a strong annual growth of 4.3% in Q1 2011. During the spring, however, growth slowed down due to a combination of factors including Japan's earthquake, the debt crisis in Europe, tighter monetary policies in countries such as China and unrest in the oil producing Middle East. But many analysts thought that once global supply chains got back to normal and oil prices receded there would be a recovery in the second half.

That consensus has changed. The outlook has deteriorated. In its September 2011 World Economic Outlook, the International Monetary Fund forecast that global GDP in growth 2011 and 2012 would fall to 4% compared with its June estimates of 4.3% and 4.5% respectively. Less activity in the developed market economies is mainly responsible for the downward revisions. The IMF has estimated that developed countries as a group will grow by 1.6% and 1.9% in 2011 and 2012 respectively, down from estimates of 2.2% and 2.6% in June. The IMF has also revised down the growth outlook for emerging markets, but to a lesser extent. The emerging and developing markets, taken as a group, are expected to expand by 6.4% and 6.1% in 2011 and 2012, 0.2% and 0.3% lower than the June estimates respectively.

Qatar’s hydrocarbon sector continues to grow at a rapid pace, driven by huge growth in natural gas production and large investments undertaken by the government. In Q2 2011, the Gross Value Added for the mining and quarrying sector is estimated at QAR 89.49 bn, compared to QAR 53.40 bn in Q2 2010. This is an increase of 67.6%.  In Q1 2011, the mining and quarrying sector grew by 10.3%. The main contributor was the increase in the value added of LNG and other gas related products. High oil prices and a surge in LNG exports will further increase Qatar’s budget surplus in 2011-2012, extending years of positive fiscal balances in the world’s main LNG exporter. The current account surplus is expected to widen in 2011 to US$ 56 bn (or 32.6% of GDP) from US$ 32 bn (or 25.3% of GDP) in 2010, according to IMF estimates. This reflects an increase in the value of oil exports from US$ 72.6 bn in 2010 to US$ 97 bn in 2011 and a surge in gas shipments. However, the self-imposed moratorium on raising LNG production in 2012-14 will reduce the growth rate in the future.

Presenting the findings of the survey Manjeet Chhabra, General Manager – Middle East, Dun and Bradstreet South Asia Middle East Ltd., said: “Despite weak global macroeconomic indicators, Qatar’s business community is optimistic in its outlook for Q4 2011, helped by a strong economy and government investment and stimulus measures. In September, the government announced substantial increases in salaries, pensions and benefits for public sector employees, which will support domestic demand. The non-hydrocarbon sector has registered an 18 points gain to 45 in the composite score. While all sectors have shown an improvement in outlook for the last quarter of 2011, the trade and hospitality sector is most bullish. The survey for the hydrocarbon sector shows that businesses’ expectations for Q4 are steady.”

Commenting on the latest Business Optimism Index, Akshay Randeva, Director, Strategic Development - Qatar Financial Centre Authority, said: “The survey’s findings are strong evidence that Qatar’s economy is buoyant and soundly based. Businesses have confidence in the country’s future. Increased consumption, further investments in the non-hydrocarbon sector and the development of a knowledge based economy are key to the country’s growth. The financial services sector is a crucial component for the fulfilment of Qatar's National Vision. We at QFC Authority are working with our partners in Qatar and internationally to support the growth of the financial services sector.

- Ends -

Notes to the Editors

Hydrocarbon Sector

The composite score of the hydrocarbon sector stands at 20 in Q4 versus 22 in Q3 2011, due to lower BOI scores for the Level of Prices and Number of Employees parameters.  The BOI for Level of Selling Prices has dropped to 10 in Q42011 from 18 in Q3. Of the respondents in the hydrocarbon sector, 54% predict that prices will remain at current levels in Q4 2011, 28% of firms expect prices to go up, while 18% expect a decline. Expectations for Industry’s Net Profits have improved: the BOI for Q42011 is 28 compared with 20 in the previous quarter. But the BOI for Number of Employees has registered a slight decrease. It stands at 30 in Q4 2011compared to 33 in Q3 2011. 

Non hydrocarbon Sector

The BOI survey shows that the composite index for the non-hydrocarbon sector stands at 45 for Q$2011, which is 18 points higher than in Q3. The government’s economic stimulus has boosted confidence. The composite BOI now stands at its second highest level since Q1 2009 despite the weak outlook for the world economy. Last month’s government announcement of substantial increases in salaries, pensions and benefits for all state and military employees will support consumption, adding to the contribution from public investment.

The six parameters surveyed are: Volume of Sales, New Orders, Level of Selling Prices, Net Profits, Number of Employees and Level of Stocks. All six parameters’ BOI scores for Q42011 have surged in comparison with Q3 levels.

The BOI for the Volume of Sales parameter has increased by 21 points to 56 in Q4 2011, while the BOI for New Orders is up by 26 points to 59. The BOI score for Level of Selling Prices stands at 23, gaining 14 points from the previous quarter’s reading of 9. The CPI for August 2011 reached 108.91, up 0.2 % compared with July 2011 and up 2.1% compared with August 2010.  Liquidity continues to push up non-housing inflation in Qatar and the recent increase in public-sector wages and salaries will add to such inflationary pressure.

Corresponding to the improved outlook for demand and prices, the Net Profits score is up by 22 points from Q32011 to 47 for Q4. At 38 for Q42011, the BOI for Number of Employees has increased by 7 points from the Q3 figure. Scoring 30 points for Q4 2011, the BOI for Level of Stocks has increased by 11 points from the Q3 score of 19.

Factors Impacting Business

Of the issues expected to affect operations adversely in Q4 2011, businesses ranked a shortage of skilled labour and the availability of finance as the primary influences. Inflationary pressure is the leading concern for just 6% of the respondents. A total of 29% of firms do not expect negative factors to affect their business.

The proportion of firms planning to invest in expanding their businesses is 35% in Q42011, down from 45% for Q3.

In the oil and gas segment, shortage of skilled labour and inflationary factors are leading concerns, but for 27% of the respondents there are no negative factors that could adversely impact business operations in the fourth quarter.

Purpose of the Index

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 January 2012.

For further information:
Press Contacts:

Dun and Bradstreet South Asia Middle East Ltd
Tel: +971 43695700
Email: eag@dnbsame.com
Website: www.dnbsame.com

Qatar Financial Centre Authority
Stephen Carriere
Head of Marketing and Corporate Communications
Qatar Financial Centre Authority
Tel: +974 4496 7784
Email: s.carriere@qfc.com.qa
Website: http://www.qfc.com.qa