Business Optimism Index Kuwait Q3 2009

Presented by Presented by Dun & Bradstreet South Asia Middle East Ltd (D&B) Dun & Bradstreet South Asia Middle East Ltd (D&B) Muthanna Investment Company (MIC) Muthanna Investment Company (MIC)

Business Optimism Index

• The D&B Business Optimism Index is recognized world over

as an indicator which ascertains the pulse of the business

community

• Provides insight into the short-term outlook business units

on sales, profit growth, investment etc

• Provides analysis of major trends, outlook and issues

concerning the business units

Survey

• Sample of business units representing Kuwait’s economy was

selected

• 500 business owners and senior executives across business units

were surveyed

• Survey conducted during June 2009 for the 3rd quarter of 2009

• Respondents were questioned about their expectations on relevant

business parameters

• Survey also captured respondent feedback on current business

conditions

World Economic Outlook

• IMF revises world economic growth downwards to -1.4% in 2009, recovery in 2010 with

2.5% growth

• GDP of United States expected to contract by 2.6% in year 2009, 0.8% growth in 2010

• Emerging nations such as China & India relatively resilient to the global economic

slump

• Middle East growth to rebound to 3.7% in 2010

Real GDP Growth (%) World Stock markets

42.9

35.4

40.2

26.7

21.2

0

10

20

30

40

50

2005 2006 2007 2008 Proj 2009

Central govt fiscal balance

4.1

3.1

5.5

10.5

6

0

2

4

6

8

10

12

2005 2006 2007 2008 2009

Kuwait's Consumer Price Inflation

-10

-5

0

5

10

15

2005 2006 2007 2008 Proj. 2009

Kuwait's GDP growth

Real GDP growth Non-oil GDP growth Oil GDP growth

Kuwait’s economy

Source: IMF

•IMF estimates suggest that Kuwaiti economy is likely to contract 1.1% in 2009; non-oil GDP is likely to grow 1.2% and oil GDP is estimated to contract by 4.5%

•Kuwait’s Consumer Price Inflation is estimated to drop to 6% in 2009 after registering a double-digit growth in 2008

•Kuwait government’s fiscal balance for 2009 is estimated at 21.2% of GDP

Source: IMF

Source: IMF

Business Optimism Indices : Q3 2009

• Marked improvement in optimism for all parameters in Non hydrocarbon sector

• Hydrocarbon sector upbeat due to recent rally in crude oil prices

Business optimism index improves with improving business sentiments and expectations of global economic recovery

Business Optimism Indices Trend

Manufacturing Sector

• The Global Manufacturing Purchasing Managers’ Index stands at 46.9 in

June, depicting a slowdown in contraction

• 53% of the companies expect no change in selling price

• Current employment levels to be maintained by 71% of the companies

Global Manufacturing Purchasing Managers’ Index GDP

9%

Construction sector

• Construction sector worldwide is expected to recover modestly in 2010 due to Governments’ efforts to boost infrastructure spending

• The sector in Kuwait is optimistic about sales, new orders and profitability

• Construction sector least upbeat about the selling price outlook among all sectors; plans to maintain a lean stock position

Infrastructure construction growth 2008-13Compound annual growth (%)

GDP

5%

• World exports are expected to decline by 25% in year 2009 due to slowdown in demand

• Due to the global recessionary conditions, the trade & hospitality sector in Kuwait is likely to face some pressure

Trade & Hospitality Sector

GDP

6%

• Drop in trade volumes has impacted the transport and logistics sector across the world

• Optimism about improvement in order books and rise in sales volumes lifts profitability expectations

• Selling price outlook bleak; 24% anticipate a decrease in Level of Selling Prices

GDP

9%

Logistics & Communication Sector

• The global financial system continues to reel under severe stress

•Overall private sector credit in advanced countries is expected to decline through 2010, and capital flows to emerging markets will also be low

•The sector is most optimistic with regards to sales, new orders and profitability in Q3 2009

GDP19%

Finance and Business Services Sector

• Sentiments in the hydrocarbon sector recover on the back of rise in oil prices

GDP

52%

Business Optimism Indices Trends : Hydrocarbon Sector

Other Key Highlights

• Internal funds will be the main source of finance for majority of the

companies in the non-hydrocarbon sector; 50% of the hydrocarbon

sector to rely on bank loans and internal financing

• Availability of finance and raw material costs cited as chief business

concerns by the non-hydrocarbon sector

• 42% of non-hydrocarbon businesses plan to keep investments

unchanged and 23% will block investments in Q3 2009

• 65% of hydrocarbon units and 43% of non-hydrocarbon units expect

global economic recovery to begin in 2010.

• Project delays and transportation costs are the main concerns for

the hydrocarbon sector

Conclusion

• Showing resilience to the global meltdown, order books show a

sharp incline with the Finance, insurance, real estate & business

services sector being the most optimistic sector

• Activity in finance & business services sector is expected to improve

with signs of increased liquidity in the domestic and international

markets

• Downward pressure on prices of goods and services to subside.

• Stabilizing market sentiments are expected to pace up the

construction activity in Kuwait in the forthcoming quarter

• A significant number of business units in the hydrocarbon sector

have a positive business outlook for Q3 2009 as Kuwait plans to

increase its oil production capacity by 2010

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