Dubai: Overall business confidence across the Gulf continued to gain in the seventh consecutive quarter, the latest Gulf Business Confidence Index from HSBC released Monday showed.
Predictions of revenue, maintenance of profits, budgets and meeting targets all remain positive and the index across all six countries is at its highest for two years.
The index reported a marginal gain of 0.9 point compared to the first quarter of 2010 with gains in the UAE, Bahrain and Qatar. The Saudi Index remained steady, but Kuwait and Oman fell slightly.
The mood of GCC business people is characterised as realistically optimistic, the HSBC study revealed.
Business sentiment has been inching upwards in the last seven quarters after hitting a low in late 2008, regarded as the height of the financial downturn.
While many of the markets surveyed have shown only a slight increase against the first quarter of 2010, the upward trend is more marked when viewed over the past year.
From the first quarter of 2009 to date, the overall index has risen by over 15 points to 86.
Perceived confidence
"The index is an excellent indicator of perceived confidence around the region... For instance, between the October '08 and January '09 surveys, the number of people who were pessimistic about meeting their targets almost doubled to 24 per cent," said Simon Vaughan Johnson, regional head of commercial banking in the Middle East and North Africa (Mena) region at the HSBC Group.
"That number has now returned to October '08 levels of 13 per cent, its lowest since the outset of the financial crisis."
Although the overall index remains below the heights of 2007 and early 2008, specific indicators show a positive outlook in key operational areas.
Forecast growth for 2010 shows that 43 per cent see an increase in business turnover in the Middle East, while 40 per cent see an increase in profit. Thirty-three per cent are planning to increase their investments.
While the mood continues to improve, intra-regional differences show some marked differences between countries in the region's corporate sector.
Saudi Arabia is most confident, with an index of 97. The UAE remains the least confident, with an index of 78.4. The UAE Index also showed one of the highest gains, quarter-on-quarter.
A recent survey from Deloitte showed that 69 per cent of chief financial officers in the region are more positive about the financial prospects of their companies compared to the last six months.
"This optimism [in the region] is a very good sign but should not lead to false hope. Given the recent cycle senior management would be wise to go back to basics," said Ron Ribeiro, chief executive officer of Aryan Business Consulting.
"They need to ask few simple but crucial questions as they prepare for growth."
Johnson said the HSBC survey results showed a mood of realistic optimism in the GCC.
"Many companies are doing better than they were 12 months ago, but they do not see another boom on the horizon. This realistic perspective is predicting steady and sustainable growth," he said.
Dubai A survey conducted among 170 recruiters in the GCC countries forecasts an optimistic employment scenario for the second half of 2010.
Fifty per cent of recruiters said that hiring will be robust in 2010, 26 per cent said that replacement hiring will take place, 18 per cent said that there would be no hiring while 6 per cent indicated layoffs.
Most recruiters said that more jobs will be created for potential employees who have at least 4-8 years experience.
"We perceive a positive sentiment among the recruiters. Most companies are now looking at replacement hiring," said Vineet Singh, business head, Naukri Gulf.com.
"We have seen that staff retention improved drastically during the downturn and the economy is under a continued momentum of recovery," Singh added.
A deeper analysis of the job categories in the survey reflects that the construction and oil and gas sectors indicated growing market optimism.
Sixty-five per cent of recruiters in construction and engineering and 52 per cent in the oil and gas industry said that new jobs will be created in the second half of this year.
