Business | Banking
Business confidence falls in Gulf region
Business confidence in the Gulf nosedived to a mark of 92, the lowest since HSBC started its Gulf Business Confidence Survey in February 2007.
- Staff Report
- Published: 23:43 October 29, 2008
Dubai: Business confidence in the Gulf nosedived to a mark of 92, the lowest since HSBC started its Gulf Business Confidence Survey in February 2007.
While two states -Bahrain and Saudi Arabia - registered a slight rise on the previous quarter, the confidence score in all other countries fell.
"However, given the survey was conducted as the global financial crisis deepened, regional equity markets fell and the oil price slumped, the results show a strong degree of resilience to global factors among the region's business people: 57 per cent expect to see an increase in revenue in the next three months; 48 per cent expect to increase their investment budget year-on-year and 47 per cent expect to increase profits this year," the report said.
A large majority - 65 per cent - said they thought the fourth quarter of 2008 would be much better or somewhat better than the previous quarter.
In spite of these optimistic indicators, pressure is building on the region's private sector from a number of sources.
The lowest number yet recorded - 47 per cent - said they would be able to grow or maintain their profit margins, a clear sign of rising costs and increased competition.
Staffing, too, remains a perennial problem, with only a third (32 per cent) optimistic about keeping up with staffing requirements.
This level has remained virtually constant since the survey began.
Another threat to growth is identified as competition, with 27 per cent citing this as the greatest challenge to their business, and only 38 per cent expressing optimism about defending themselves against competitive threats.
"The expectation of revenue growth and plans for investment indicate that business sentiment in the region remains resilient," said Tim Reid, co-head of Global Banking for HSBC in the Middle East.
"The emergence of competition pressures as a threat to business is a reflection of the growth of the private sector and the arrival of new international competitors in the market."
Keith Bradley, HSBC's regional head of commercial banking, added: "You would expect some caution to come into the market in difficult economic times. But the relatively strong outlook expressed by businesses in this survey serves as a reminder that the GCC is entering a slowdown, not a recession, and that these economies will continue to grow."
The third quarter survey of 2008 involved 1,524 respondents from all six countries in the GCC, with the majority of participants coming from Saudi Arabia and the UAE.
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