Gulf Business remains confident for short and long-term prospects
Expectations of growth fall over the year, although remain high
59% expect a currency revaluation
The HSBC Gulf Business Confidence Index for the fourth quarter 2007 has revealed that business remains optimistic, but less so than at any time in 2007. The Index, a comprehensive survey of confidence levels among GCC business people, has fallen from 100 to 97.8 over the course of 2007.
Despite this trend, absolute confidence levels remain very high, with 66% expecting revenue to grow in the next three months, 52% expecting to increase profit margins, and 65% predicting turnover to rise between 5 and 15%. In addition, 57% expect to grow their workforce.
On the much-debated issue of regional currencies, 47% of business people say that a revaluation would have a positive impact on their business, while 59% expect the authorities in their country to revalue their currency against the US dollar.
While the mood of business in the region is once again one of expansion and growth, the Index also reveals a slow-down in this sentiment:
- 52% expect to maintain their profit margins in the next three months (down from 58% in Q1)
- 66% expect to grow revenue in the next three months, compared with 71% at the start of the year
- The impact of inflation has become a major headache for business, with 57% saying it has a negative impact on their operations, compared to 36% in the first quarter
Some notable regional variations emerge from the fourth quarter results:
- Qatar was the most confident state in the Gulf in the fourth quarter, with an Index score of 112. Qatar is the only Gulf state to have shown an increase in the Index over the year, all others having fallen slightly or remained static.
- Bahrain was the least confident, scoring 92. (First Quarter is the benchmark with a score of 100 for all countries.)
"Looking at the year as a whole, confidence levels among Gulf business have shown a consistent level, which are higher than in many parts of the world" said Antoine Cahuzac, CEO of HSBC Global Banking in the Middle East. "Gulf business is in growth mode, and remains positive in its outlook. The Index reflects this sentiment across the region," he added.
"The findings of the fourth Business Confidence Index reflect the increasing challenges and opportunities of doing business in the region. Elements such as inflation, human resources and currency valuations have emerged as the major issues facing the region's business people; but against this background the survey indicates a strong optimism and level of confidence in the future. This reflects what our customers are telling us: that this is a booming part of the world to do business, and that expectations for 2008 remain high."
Compiled with polling organization YouGov Siraj, HSBC surveyed 1082 business people in the six countries of the GCC in December 2007. Respondents represented a broad range of industries, and ranged in seniority from CEOs to middle management levels.
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About the HSBC Gulf Business Confidence Index:
The HSBC GCC Business Confidence Index was compiled by YouGov Siraj. The Index appears quarterly, and tracks business sentiment in all six countries of the GCC.
Index Methodology:
The Gulf Business Confidence Index is calculated using the results from Q1 2007 as a base, with a score of 100. This and future Indices will show a deviation from that base to indicate rising or falling levels of business confidence.
A score greater than 100 indicates a shift in the positive direction. A score lower than 100 indicates that business confidence is showing a negative trend.
Questionnaires were completed between 1st and 5th December 2007.
A total of 1082 respondents took part in the survey, conducted by YouGov Siraj, from the following countries: Oman, Kuwait, Bahrain, Qatar, Saudi Arabia, United Arab Emirates.
Industries represented were as follows:
Construction: 11%
Information Technology: 9%
Education/Academia: 7%
Other private sector: 13%
Banking and Finance: 7%
Advertising/Marketing/PR: 6%
Oil, gas and petrochemicals: 5%
Others: 36%
The level of seniority of respondents was as follows:
CEO/President/Chairman/Owner: 4%
Senior Manager: 14%
Professional: 25%
Middle Manager: 21%
Executive/Clerical: 19%
Junior Manager: 16%
HSBC Bank Middle East Limited
HSBC is the largest and most widely represented international bank in the Middle East. HSBC Bank Middle East Limited has 36 branches throughout the United Arab Emirates, Oman, Bahrain, Qatar, Kuwait, Jordan, Lebanon and the Palestinian Autonomous Area, including an offshore banking unit in Bahrain. In addition to the branch network the Bank maintains representative offices in Tehran, Iran and Tripoli, Libya. This extensive regional coverage is strengthened by another member of the HSBC Group, HSBC Bank Egypt SAE, and by its associated companies, The Saudi British Bank, British Arab Commercial Bank Limited, and HSBC Saudi Arabia Limited.
Media enquiries
Tim Harrison
+971-4-509 3389
mobile: +971-50-657-9920.
Email: tim.harrison@hsbc.com
© Press Release 2008
