UAE one of three most confident countries about business outlook

Dubai: The business outlook in the UAE for the next three months improved over the previous quarter, according to the latest HSBC Trade Confidence Index.

The HSBC index shows that the UAE is one of the three most confident countries in the world on trade activity and growth. The UAE scored 118 points, up three per cent from the previous quarter. Sentiment was also up in Hong Kong (102 points) and Singapore (110 points),

The HSBC Trade Confidence Index covers 12 markets including key economies in the Asia-Pacific region, the UAE, Brazil, the UK and the US.

In the global opinion survey, more than 3,500 trade-oriented small- and mid-sized corporates were asked about their three-month outlook on: trade volume; buyer and supplier risks; the need for trade finance; access to trade finance and the impact of foreign exchange on their businesses.

‘Foundation'

"International trade is the foundation of the UAE economy. It is pleasing to see growing confidence in the UAE business environment. Clearly traders have been very receptive to government support," said Simon Vaughan Johnson, regional head of Commercial Banking, HSBC Bank Middle East.

Earlier this week the International Monetary Fund said the timely government support to the financial system in the UAE helped it withstand the impact of the global credit crisis.

The Gulf governments and central banks and the UAE in particular have been proactive in supporting the banking sector through liquidity support programmes and direct capital injections. These measures have been a key factor in supporting the confidence in these economies," said Masoud Ahmad, director at the Middle East and Central Asia Department of the IMF.

UAE one of three most confident countries

UAE business sentiment improved further since the first survey in the second quarter of 2009. More than 46 per cent (34 per cent last time) of UAE respondents expect trade business to increase over the next three months, and a further 40 per cent expect it to remain at current levels.

"Encouragingly, traders in the UAE have focused their efforts on growing business rather than on financial engineering to generate profits," said Kersi Patel, regional head of Trade and Supply Chain, HSBC Bank Middle East.

More than 40 per cent of traders in the UAE see government regulations as beneficial to their business, compared to 26 per cent in Singapore and 11 per cent Hong Kong.

Nearly half of all respondents in the UAE will expect to borrow from banks to fuel business expansion.

For the next three months, the UAE expects supplier risk to be very stable. About 80 per cent of traders said their expectations of suppliers not honouring trade agreements to remain the same.