Commenting on the findings of the latest survey Prashant Kumar, Associate Director, Dun and Bradstreet South Asia Middle East Ltd. said: "Business sentiments among the non-hydrocarbon sector units have improved in Q1 2013 compared with the previous quarter while sentiments for the hydrocarbon sector have remained almost same as the previous quarter. Recent data from the Qatar Statistics Authority (QSA) show that real GDP rose 3.9% from a year earlier in Q3 2012. According to further estimates by the QSA, the mining and quarrying sector declined by 0.8% in Q3 2012 from a year ago. The hydrocarbon sector optimism index stands at 15 compared to 17 in Q4 2012. On the other hand, non-hydrocarbon sector optimism has improved in Q1 2013 from the previous quarter. As observed in the last two quarters, we continue to see high optimism among businesses in transport & communications. The survey also reflects rising optimism levels in Trade & Hospitality as well as the Manufacturing sectors."
Yousuf Al-Jaida, Director -Strategic Development - Qatar Financial Centre Authority said: "Despite the challenging global economic environment, Qatari businesses sentiment is generally optimistic for the first quarter of 2013. The Business Optimism Index captures the 4 four points growth in optimism in the financial services sector. The QFC Authority continues to pursue its strategy of supporting the growth of the country's financial sector and economy diversification. Our efforts are fully aligned with the Qatar National Vision 2030 and the country's journey towards becoming a knowledge based economy."
Sheikh Mohmad Bin Faisal Bin Qassim Al Thani, Member at Qatari Businessmen Association, said: "Qatar's business community is delighted to see continuous optimism in Qatar's growth. This growth specifically in the private sector and non-hydrocarbon sectors reflect the stable measures and steps that Qatar is directed towards, aiming at diversifying the income resources and realizing the vision of H.H. Sheikh Hamad Bin Khalifa Al Thani, The Emir of Qatar, and maintaining a sustainable growth in the long run."
Hydrocarbon SectorThe BOI survey for Q1 2013 reveals that the composite score for the hydrocarbon sector stands at 15 versus 17 in Q4 2012. The BOI for the Net Profits parameter has declined to 20 in Q1 2013 from 48 in the previous quarter while that for the Level of Selling Prices has gained 22 points to 12 in Q1 2013. The BOI for the Number of Employees parameter stands at 15 from 40 in Q4 2012.
Non hydrocarbon SectorThe BOI survey shows that the composite index for the non-hydrocarbon sector stands at 45, which is 7 points higher compared with the value in Q4 2012. The BOI scores for all the six parameters have improved. The BOI for the Volume of Sales parameter stands at 61 compared with 56 in Q4 2012, while the BOI for New Orders is at 56 compared with 50 in Q4 2012. The Level of Selling Prices parameter has increased by 6 points to 13 in Q1 2013 whereas the Net Profits parameter has marched to 49 from 40 in Q4 2012. At 47 points, the BOI for Number of Employees is 9 points higher than the previous quarter's score of 38 points. The BOI for Level of Stocks has increased by 2 points from the Q4 2012 score of 26.
Factors Impacting Qatari Business OptimismWith improvement in the overall business outlook for Q1 2013, larger proportion (42%) of non-hydrocarbon sector business units feel that their businesses will not face any negative impact in Q1 2013. Availability of finance and shortage of skilled labor are cited as leading concerns respectively, by 18% and 16% of the consolidated / overall sector respondents. Availability of finance emerged as a key concern for Construction, while Manufacturing sector respondents expressed their concern on skilled labor shortages. In spite of being the most optimistic amongst other sector peers, Transport & Communication sector respondents expressed concerns on both the availability of cheap finance as well as skilled labor. Around 9% of the overall sector respondents anticipate fluctuating demand for products / services as a challenge for their business. Another 8% of the respondents have identified inflationary factors as a concern for their businesses. Only 2% of respondents cited concerns with Payment / Receivable delays.
Sentiments related to investment in business expansion have remained steady when compared with the previous quarter. 48% of the non-hydrocarbon companies have said that they would invest in business expansion in Q1 2013 compared with 44% in Q4 2012. Only 19% said that they would not invest in expansion.
In the hydrocarbon segment, 38% of the respondents do not foresee any negative factors impacting business operations in Q1 2013; the corresponding figure for the previous quarter stood at 42%. 20% of the respondents have identified fluctuating demand for products / services as their leading concern; 18% of the respondents are concerned about availability of finance; 13% of the sector respondents have highlighted inflationary factors adversely impacting their business and 5% of the respondents have cited concerns with availability of skilled labor and payment receivable delays.
Global Economic Environment to Impact Oil DemandThe tepid rate of global economic expansion is likely to keep oil demand growth relatively slow in 2013, with growth shifting to emerging market economies and away from the world's developed economies. According to International Energy Agency (IEA), five of the top 10 oil consuming nations now are non-OECD countries.
Oil prices have stayed consistently high, despite declining growth in Europe and in the US; slow oil demand growth does not necessarily mean depressed oil prices in 2013. OPEC has forecasted that oil demand will grow at around 0.8 million bpd in 2013, largely due to the improving economic conditions in the US and China. The uncertainties regarding the prospects for the world's major economies, as well as the potential adverse impacts of the enduring weaknesses of the international financial system, evidently constitute significant downside risk for oil markets. Yet, possible upside potential also exists and could have a sizable impact on oil prices and investment needs.
A period of heavy investment in Qatar's oil and gas resources ended in 2011, meaning that the energy industry, which accounts for almost half the economy, is now contributing much less to overall growth. Maturing oil fields are also contributing to the slowdown in the hydrocarbon sector growth. Export earnings from oil and gas have continued to underpin the surplus and are expected to do so again in 2013. The General Secretariat for Development Planning (GSDP) has said that the country's current account surplus in the first half of 2012 is estimated at 20.4% of nominal GDP, and for the full year at 29.1%. Downside risks exist in the form of a sharp fall in oil and gas prices (due to global economic uncertainties) and adverse geopolitical developments.