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Mon 21 Jun 2010 12:22 PM

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New HSBC index reveals GCC business 'optimism'

Revenue, profits targets all remain positive, Saudi most confident in region.

New HSBC index reveals GCC business 'optimism'

The mood of business people in the GCC is "realistically optimistic", according to the latest HSBC Gulf Business Confidence Index published on Monday.

Predictions of revenue, maintenance of profits, budgets and meeting targets all remain positive, and the index across all six countries was at its highest for two years, the bank said in a statement.

The mood of business people has been trending upwards over the last seven quarters, it added, after a low in late 2008, widely seen as the height of the financial crisis.

While many of the markets surveyed have shown only a slight increase against Q1 2010, the upwards trend is more marked when viewed over the past year.

From Q1 2009 to date, the overall index has risen by more than 15 points to 86.

Although the overall index remained below the heights of 2007 and early 2008, specific indicators showed a positive outlook in key operational areas.

Forecast growth for 2010 revealed that 43 percent see an increase in business turnover in the Middle East, 40 percent see an increase in profit, and 33 percent are planning to increase investment.

"The index is an excellent indicator of perceived confidence around the region, but I believe the most illuminating details lie in the underlying data," said Simon Vaughan Johnson, regional head of Commercial Banking, HSBC Group, MENA.

"For instance, between the Oct '08 and Jan '09 surveys, the number of people who were pessimistic about meeting their targets almost doubled to 24 percent. That number has now returned to Oct '08 levels of 13 percent, its lowest since the outset of the financial crisis.

"This mirrors what our customers are telling our teams around the region - companies are actively looking for new opportunities, whilst continuing to rationalize unnecessary spend, and streamline their operations to maximize revenue potential."

Over half of respondents were optimistic that the next three months would see increasing revenue for their companies, and 35 percent were anticipating revenue growth from international trade opportunities.

The index also showed that Saudi Arabia was most confident, with an index of 97 with the UAE the least confident, with an index of 78.4 although the UAE index also showed one of the highest rises quarter-on-quarter.

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