Posted on September 12, 2014
Optimism among Qatar’s business community remains firm for the third quarter of 2014. The composite BOI for Qatar’s Non-hydrocarbon sector stands at 39, the same as for Q3, 2013. However, it is 8 points lower than in Q2, 2014, primarily because of the expected seasonal downturn in business activity during the holy month of Ramadan and the summer.
Within the Non-hydrocarbon sector, Manufacturing is the most strongly optimistic for Q3 2014, backed by demand from new projects, an overall strong economy and a rising population. At 46, the BOI is 11 points higher than in the same period of 2013. Seasonal factors are the main cause for a sharp fall in the index for the Finance, Real Estate and Business Services sector. However, Finance and Insurance firms continue to have a stronger outlook than the Real Estate and Business Services segments. Overall, 61% of firms in the sector expect an increase in sales, 64% expect an increase in orders and 40% expect to invest in business expansion in Q3, 2014.
About half of all respondents – 44% of firms in the Hydrocarbon sector and 51% of firms in the Non-hydrocarbon sector – do not anticipate any hindrances to their daily operations in Q3, 2014. Looking at what does concern Qatar’s businesses, the leading issue for the Non-hydrocarbon sector is competition, followed by government regulations. Competition, unavailability of skilled labour and delay in payments are key concerns for Hydrocarbon sector players
The composite BOI for the Hydrocarbon sector has been steadily declining since Q4, 2013 and now stands at 1, down from 8 in Q2, 2014 and 13 in Q3, 2013. This is in line with the projected contraction in GDP from the Hydrocarbon sector during 2014. According to International Monetary Fund forecasts, Qatar’s real GDP from the Hydrocarbon sector will contract by 1% during 2014. Qatari businesses have modestly scaled back their outlook for investment in business expansion: 24% of Hydrocarbon firms and 38% of Non-hydrocarbon firms plan to invest in business expansion in Q3 compared with respectively 31% and 41% firms in Q2, 2014.
In general, Small and Medium-Sized Enterprises (SMEs) are more optimistic about the businesses environment than large companies. Of SMEs, 53% said they did not anticipate any hindrances to their operations in Q3, 2014, while the corresponding number for large companies is 45%.
Yousef Mohammed Al-Jaida, Deputy Chief Executive Officer of the QFC Authority, said: “It is very encouraging to see from this BOI survey that Qatar’s businesses remain firmly optimistic despite the seasonal downturn. This finding underlines the economy’s long-term sustainability. The relatively strong outlook for Finance and Insurance is further evidence that Qatar’s financial sector is robust and playing its role in promoting economic diversification and the country’s development.”
On behalf of the Qatari Businessmen Association, Sheikh Mohammed bin Faisal Al-Thani said: “Qatar’s entrepreneurs are increasingly important to our nation’s economy and to realising the Qatar National Vision 2030, under the wise guidance of His Highness Sheikh Tamim bin-Hamad Al-Thani, the Emir of the State of Qatar. The sharp rise in the optimism of the Manufacturing sector over the last year, for example, shows that the private sector is responding very productively to Government policy, notably investment in infrastructure.”
Commenting on the findings of the most recent survey, Prashant Kumar, Associate Director, Dun and Bradstreet South Asia Middle East Ltd., said: “Optimism among the Qatari business community is firm despite a moderation in the BOI scores for the third quarter due to a seasonal downturn and slowdown in business activity during the holy month of Ramadan. It is important to note that SMEs are more optimistic than large companies. This is significant, given their importance to the development of the overall economy. Although the business community’s expansion plans have been scaled down, the overall outlook remains resilient. This can be attributed to the strong fundamentals of the Qatari economy, particularly investment from the government in infrastructure development and the positive impact of a rising population. Backed by the government’s policy of economic diversification, the business environment remains conducive to the growth of businesses in Qatar.”