Dubai: Business confidence among small and medium-sized enterprises in the Arab region remains the highest in the world, Europe's largest bank, HSBC, said Tuesday in a study.
On a scale of 0 to 200, the region scored 125, followed by Latin America at 118, and the US and Canada at 107 in the survey covering the first half of 2009.
In the Middle East, business confidence was the highest in Qatar, at 159 points, followed by Saudi Arabia at 125 points and Egypt at 110 points. The study did not include the UAE.
"Confidence levels appear to be back to pre-financial crisis levels. The Middle East outlook correlates strongly to the global emerging market outlook, and as a major international trading hub, the region is well-placed for future growth," said Nicholas Levitt, regional head of business banking at HSBC.
The Small Business Confidence Monitor, a semi-annual study, rates the six-month outlook on local economic growth, capital investment plans and recruitment. Twenty markets were covered.
Emerging markets in Asia, the Middle East, Latin America and Eastern Europe were significantly more optimistic than the developed countries.
Economic activity
A key driver of businesses, consumer confidence in the region is also picking up in line with economic activity, a study by MasterCard showed earlier.
The UAE saw a considerable jump in optimism in the first half of last year. It was positioned at the third highest in the world. In its latest review of economic outlook, the International Monetary Fund is predicting a flat growth of between 0 to 1 per cent for the UAE this year, from an estimated contraction of 0.7 per cent in 2009.
The business confidence survey's measure of GDP outlook showed that 47 per cent of the region's small and medium enterprises (SMEs) expect it to increase over the next six months, 36 per cent expect the pace to remain the same, and only 17 per cent expect growth to slow.
Investment sentiment of SMEs within their own business was the highest in India, while the Middle East came in second.
Of the total SMEs in the region, 47 per cent are planning to increase their capital expenditures, 41 per cent say they will maintain current levels and only 11 per cent are planning reductions.
Reflecting strong growth, recruitment outlook of the region was also the highest globally. Thirty-six per cent of the region's SMEs say they will increase staff in the next six months and 58 per cent say they will keep staff levels the same.
"There is a rebalancing of the world economy, and emerging markets are becoming more and more important as a driver of growth," Levitt said.
Investor outlook
Meanwhile, a recent study of investor sentiment in the GCC by Shuaa Capital, the UAE's largest investment bank, saw a drop of 2.4 points last month.
Following an improvement of the GCC Investor Confidence Index at the end of 2009, it decreased slightly to 114.5 last month, the report said. "December's special investor sentiment report reflected the impact of the decision to repay the Nakheel sukuk on time, resulting in a jump in the index," it said.
However, the UAE Index lost 12.8 points to 96.1. "Driving much of last month's GCC Index decline was primarily the bearish six month stock price outlook of participants for all GCC countries," Oliver Schutzmann, the chief communications officer at Shuaa and author of the report, said.
Saudi Arabia was the only country last month to see its index gain ground, as it rose 6.6 points to 142.4.
