Confidence levels among the Gulf business community remain high, although they have shown consistent decline over the past year, according the HSBC's quarterly survey.
The main factors cited for the decline in outlook are high inflation and the weakness of the US dollar. Also, the continuing high price of oil is now perceived to be having a negative impact on businesses in the Gulf Cooperation Council (GCC).
Inflation stood out as a major concern, with the proportion of business claiming a negative impact rising from 36% in the first quarter of 2007 to 61% in the first quarter of this year.
Yet, despite these potential signs of a downturn in business, 65% are optimistic about increasing their revenues, and 28% expect their turnover to increase by more than 15% in 2008, and over half expect they will be increasing their staff numbers during 2008.
"It is important to keep these figures in perspective. The slowing of the major western economies, the credit crunch, and the fall in global stock markets inevitably affects the outlook and sentiment of business people,” comments Keith Bradley, regional head of commercial banking.
“However, the Gulf's economies continue to expand, and business people’s outlook continues to be broadly positive. The majority are expecting very healthy growth and expansion in 2008. This mirrors what our customers are telling us, with growth and expansion being the dominant themes,” he adds.Regarding the issue of regional currencies, the number of businesses expecting a revaluation of their local currency has fallen from 59% in the fourth quarter of 2007 to 41%. Almost half believe that a revaluation would have a positive impact on their business.
HSBC’s GCC business confidence index was compiled by YouGov Siraj. The index is produced quarterly and tracks business sentiment across all six GCC countries.
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