Qatar Business Optimism Index Q3 2009

Presented by Presented by Dun & BradstreetDun & BradstreetQatar Financial Centre (QFC) Authority Qatar Financial Centre (QFC) Authority

• The D&B Business Optimism Index is recognized world over as an

indicator which ascertains the pulse of the business community

• Provides insight into the short-term outlook of business units on

sales, profit growth, investment etc

• Provides analysis of major trends, outlook and issues concerning

the business units

Business Optimism Index

• Sample of business units representing Qatar’s economy was selected

• 500 business owners and senior executives across business units were

surveyed

• Survey conducted during June 2009 for the 3rd quarter of 2009

• Respondents were questioned about their expectations on relevant

business parameters

• Survey also captured respondent feedback on current business

conditions

Survey

Introducing Composite Business Index

• The Composite Business Index is calculated separately for the hydrocarbon and non hydrocarbon sector

• Weights are assigned to each of the parameters and the base period is chosen to calculate the index

• For the non hydrocarbon sector, the Composite Index captures the aggregate behavior of six individual indices

• For the hydrocarbon sector, the Index takes into account the aggregate behavior of three individual indices

World Economic Outlook

• IMF revises world economic growth downwards to -1.4% in 2009, recovery expected

in 2010 with 2.5% growth

• GDP of United States expected to contract by 2.6% in year 2009, its first since 1991

• Recent emergence of green shoots have boosted sentiments all across the world;

stock markets shows recovery from their multi-year lows

• GCC growth to rebound to 4.2% in 2010

Real GDP Growth (%) World Stock markets

Economy of Qatar

• At QAR 70.9bn, Qatar’s

Nominal GDP is 17.5% lower

than Q1 2008, but is

predicted to recover quickly

• Steep decline in hydrocarbon

prices, lead to 40% decline in

the sector GDP in Q1 2009

over Q1 2008

Quarterly Sector GDP (QAR billion)

Source: Qatar statistics quarterly

Business Optimism Indices

The Composite Business Optimism Index for the non-

hydrocarbon sector stands at 70.40

Business Optimism Indices Trend

7882

41

9

34

0

20

40

60

80

100

Q3 08 Q4 08 Q1 09 Q2 09 Q309

Inde

x

Volume of Sales

76

63

40

19

37

0

20

40

60

80

100

Q3 08 Q4 08 Q1 09 Q2 09 Q309In

dex

New Orders

66 74

37

326

0

20

40

60

80

100

Q3 08 Q4 08 Q1 09 Q2 09 Q309

Inde

x

Net Profits

59

52

8

-18-4

-20

0

20

40

60

80

100

Q3 08 Q4 08 Q1 09 Q2 09 Q309

Inde

x

Level of Selling Prices

66

6042

24

120

20

40

60

80

100

Q3 08 Q4 08 Q1 09 Q2 09 Q309

Inde

x

Number of Employees

51 61

131

23

0

20

40

60

80

100

Q3 08 Q4 08 Q1 09 Q2 09 Q309

Inde

x

Level of Stock

Manufacturing Sector

• The Global Manufacturing Purchasing Managers’ Index stands at 46.9 in June

• 61% of companies expect no change in selling price

• Current employment levels to be maintained by 79% of companies

Global Manufacturing Purchasing Managers’ Index

Source: J P Morgan and market economics in association with ISM and IFPSM

BOI - Manufacturing SectorGDP

8.3%

Construction Sector

• Construction sector worldwide is expected to recover modestly in 2010 due to Governments’

efforts to boost infrastructure spending

• Qatar’s construction sector is showing growing optimism about new orders and profitability

due to significant Government support

• Selling prices are expected to fall due to lower material costs

Infrastructure construction growth 2008-13Compound annual growth (%)

BOI – Construction Sector GDP

4.9%

Trade & Hospitality Sector

• World exports are expected to decline by 25% in year 2009 due to slowdown

in demand

• Due to seasonal variations, the trade & hospitality sector in Qatar is likely to

face some pressure

BOI – Trade & Hospitality sectorGDP

3.6%

Logistics & Communication Sector

• Global transport sector has been hit by a sharp decline in global trade volumes;

recovery expected in 2010

• 58% of the respondents are optimistic on receiving new orders

• Higher net profits are also expected by 48% of the companies in the third quarter

BOI – Logistics & Comm. sectorGDP

3.3%

Finance and Business Services Sector

• The Global Services PMI for the month of May stands at 43.2

• Sector optimistic on volume of sales and new orders with 50% and 53% of

the respondents respectively expecting higher numbers

BOI – Finance & BusinessServices sector

GDP9.9%

Oil & Gas sector

• 39% of the firms expect selling prices to fall, 22% anticipate a rise

• The Composite Business Optimism Index stands at 52.13

GDP

61.7%

Other Key Highlights

•Trade, logistics & communication sector most concerned about availability of finance

•34% of companies in the non hydrocarbon sector to increase investment in business expansion; 25% have no investment plans

•Internal financing is preferred by 53% and 68% of the respondents in the non hydrocarbon and hydrocarbon sector respectively

•61% of companies in the hydrocarbon sector facing project delays

•Majority of the companies are expecting the global economy to start recovering by next year

Conclusion

• With recent signs of global economic revival, the demand level in Qatar is expected to increase; Manufacturing sector most optimistic

• Qatar’s construction industry to get support from Government’s budget allocation which emphasizes on infrastructure development

• Activity in finance & business services sector is expected to improve with signs of increased liquidity in the international markets

• Downward pressure on prices of goods and services to subside. Inflation edged up 0.6% in May (April 0.2%)

• Hydrocarbon sector uncertain on recent crude price rally as demand is expected to remain weak in the medium term.

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