Qatar firms to be cautious in Q2 - survey

Most Qatar companies will tread carefully during the second quarter of the year in relation to staff recruitment and investment, according to a new business confidence index.

The index, published by Dun & Bradstreet South Asia Middle East (D&B) in association with Qatar Financial Centre (QFC) and Al Khalij Commercial Bank, was conducted in March against the backdrop of crude oil prices hovering around $45 and a deepening global recession.

According to a recent IMF report, the Qatari economy is expected to grow by 29 percent in 2009 in spite of the slowdown in world economy but the index reveals that sentiments in Qatar have taken a hit due to the global financial crisis.

Commenting on the overall findings of the BOI, Rajesh Mirchandani, CEO of Dun & Bradstreet South Asia Middle East Ltd. said: "The outlook for second quarter is low key as compared to the previous quarter due to ongoing global economic uncertainty.

"According to the survey, demand levels in the Qatari economy are expected to decline which will impact the profitability of business units across all sectors.

"Most business units are likely to tread cautiously in maintaining inventory levels and hiring new employees in light of the declining demand outlook. However, inflation is expected to decline further in the second quarter."

The study suggests that the downward pressure on prices will remain intact as the selling price index dropped to -18 as against 8 in the last quarter.

The biggest respite is expected to come from the building, construction & real estate sector with 39 percent of respondents anticipating a fall in selling prices and 46 percent expecting no change.

54 percent of respondents expect the cost of capital to stabilise in the second quarter with government taking measures to lower the interest rates to help the economy minimise the impact of the global financial crisis.

The availability of finance remains a key issue to the business community with 40 percent of respondents surveyed citing a concern over it.

The sentiments in the hydrocarbon sector seem to be showing some signs of revival as the Business Optimism Index for the selling price has recovered from the low of -54 recorded in the last quarter to -7 in the second quarter.

However, 57 percent of respondents in the hydrocarbon sector have cited the fall in oil prices and another 43 percent have referred to possible project delays as the key concerns facing the industry in the second quarter.

Forty four percent of index respondents in the non-hydrocarbon sector expected the global economic recovery to start next year while 29 percent of businesses were more optimistic and expect the global economic recovery to begin sometime this year.

The next Business Optimism Index on Qatar will be released in July.

READERS' COMMENTS

MORE FROM ARABIANBUSINESS.COM