Gulf's business confidence remains buoyant - HSBC

10 June 2007

Dubai: The GCC's business confidence maintained a positive outlook according to the second quarter 2007 HSBC Gulf Business Confidence Index.

The survey, a comprehensive survey of confidence levels among GCC business people, was conducted by HSBC along with polling organisation YouGov Siraj. The two polled 1,063 business people in the GCC.

"The second quarter results show a strong correlation to the first quarter, with the prevailing mood of business once again being one of expansion and growth," HSBC said in a statement.

Strong similarities

A majority of the business people surveyed by HSBC said they are positive about the investment outlook with 57 per cent saying they expect profits to grow by more than five per cent in 2007, against 59 per cent in the first quarter of this year.

While 52 per cent are planning to increase investment in their businesses in 2007, 55 per cent said they would hire more staff in the next 12 months. More than half of the respondents said an expanding market is the prime driver of business growth in the region.

"The consistency of results in the index reflects the sustained strength of the regional business environment in the first half of 2007," said Antoine Cahu-zac, CEO of HSBC Global Banking in the Middle East.

"We continue to operate in a benign environment for business, and the index reflects the positive outlook among the business customers of HSBC in the region."

Using data collected over two quarters, and using a statistical comparison of responses, HSBC compiled a Business Confidence Index in which first-quarter 2007 is given the benchmark score of 100, with future index results to be gauged against this.

While the second quarter results show strong similarities, some interesting differences between countries have emerged.

Qatar has shown strong growth in confidence to an index rating of 114, and Bahrain business has also grown more confident, with an index rating of 109, but Kuwait showed a decline to 95.

The UAE (99), Saudi Arabia (100), and Oman (97) maintained confidence at the same levels as in the first quarter.

The survey identified inflation, rising property costs and constraints on human capital as the key challenges facing the business community.

Major challenge

Forty-nine per cent of the business people regarded inflation as a threat, up from 48 per cent in the first quarter.

The cost of real estate also remained a major challenge, with 47 per cent citing this overhead as having a negative impact on their businesses.

"The findings of the Business Confidence Index underline what we are hearing from our customers: that Gulf business remains in good health," said Keith Bradley, Regional Head of Commercial Banking for HSBC Middle East.

"We have seen a strong similarity in outlook between first quarter and second quarter, indicating that business in the Gulf is in good shape and will continue to prosper."

Outlook: Majority expects profits to grow over 5%

- A majority of the business people surveyed by HSBC say they are positive about the investment outlook with 57 per cent saying they expect profits to grow by more than five per cent in 2007, against 59 per cent in the first quarter of this year.

- While 52 per cent are planning to increase investment in their business in 2007, 55 per cent said they would hire more staff in the next 12 months. More than half of the respondents said an expanding market is the prime driver of business growth in the region.

- Qatar has shown strong growth in confidence levels to an index mark of 114, Bahrain business has also grown more confident, with an index mark of 109 Kuwait showed a decline to 95. The UAE (99), Saudi (100), and Oman (97) continued to maintain confidence at the same level as in the first quarter.

By Babu Das Augustine

Gulf News 2007. All rights reserved.