Qatar Business Optimism Survey Q1 2010

Presented by Presented by Dun & BradstreetDun & BradstreetQatar Financial Centre (QFC) Authority Qatar Financial Centre (QFC) Authority

• 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 of business units on

sales, profit growth, investment, etc.

• Provides analysis of major trends, outlook and issues concerning

the business units

Business Optimism Index

• Sample of business units representing Qatar’s economy was selected

• 500 business owners and senior executives across business units were

surveyed

• Survey conducted during December 2009 for the 1st quarter of 2010

• Respondents are asked questions about their expectations on relevant

business parameters

• Survey also captures respondent feedback on current business

conditions

Survey

Composite Business Index

• The Composite Business Index is calculated separately for the hydrocarbon and non hydrocarbon sector

• Weights are assigned to each of the parameters and the base period is chosen to calculate the index

• For the non hydrocarbon sector, the Composite Index captures the aggregate behavior of six individual indices

• For the hydrocarbon sector, the Index takes into account the aggregate behavior of three individual indices

World Economic Outlook

• Global economic recovery led by emerging markets such as BRIC countries

• US economy expanded while Euro zone & UK posted negative growth, if at a lesser

annual rate of decline

• Global Manufacturing PMI indicates renewed expansion across all major economies

Real GDP Growth Q3 2009 (yoy) Manufacturing PMI December 2009

2.21.3

-4.1-4.8 -5.1

8.97.9

-1.2

-6

-4

-2

0

2

4

6

8

10

US

Japan

Euro

zone

Germ

any

UK

Chin

a

India

Bra

zil

%55.9

53.8

51.6

52.7

56.155.6

55

54.1

49

50

51

52

53

54

55

56

57

US

Japa

n

Euro

zone

Ger

man

y UK

Chi

na

Indi

a

Glo

bal

14.7 17.326.5

-1

4.711.3

-41.7-48.4

-42.7

10

-16.2

-28.3

-0.2

-7.5-2.1 -5.5

-60

-40

-20

0

20

40

Oil Gas Manfact Constr Trade,Rest &Hotels

Trans &Comm

Fin, I ns,Real Est& BusSer

TotalGDP

%

GDP Q3 2009 (q/q) GDP Q3 2009 (y/y)

Economy of Qatar

• Qatar’s nominal GDP grew

11.3% sequentially in Q3 2009,

indicating early stages of

recovery

• Recovery in oil prices and

output a major factor behind

growth revival

• Manufacturing posted strongest

growth amongst all sectors

Gross Domestic Product - Q3 2009

Crude oil production

730

740

750

760

770

780

790

800

810

820

Q4 08 Q1 09 Q2 09 Q3 09 Sep-09 Oct-09 Nov-09

'00

0 b

pd

Composite Business Optimism Indices

• Composite BOI for Non Hydrocarbon sector sees a minor dip

• Higher energy prices in the international markets leads to improved outlook for the Hydrocarbon sector

Business Optimism Trends – Non Hydrocarbon Sector

63

47

15

50

11

4544

14

1

32

20

3338

50

9

32

19 20

0

10

20

30

40

50

60

70

Volume of Sales

New Orders Level of Selling Prices

Net Profits Number of Employees

Level of Stock

Inde

x

Q3 2009 Q4 2009 Q1 2010

33.235 35.8

37.3

46.9

50

53.1 5354.4 55

45.3

41.8

53.7

30

35

40

45

50

55

Dec

-08

Jan-

09

Feb

-09

Mar

-09

Apr

-09

May

-09

Jun-

09

Jul-0

9

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Manufacturing Sector

• Global manufacturing activity expands further, December reading at 44-month high

• Qatar manufacturing sector outlook for Q1 mixed

• Lower expectations regarding sales and inventory suggests current demand has

moderated

• However, increased optimism about new orders signals expectations of

future improvement

Global Manufacturing Purchasing Managers’ Index

Source: J P Morgan and market economics in association with ISM and IFPSM

BOI - Manufacturing Sector

GDP

8.3%

19 21

-19

14

4 4

71

38

16

59

40

58

27 30

-7

33

169

-30

-20

-10

0

10

20

30

40

50

60

70

80

Volume of Sales

New Orders Level of Selling Prices

Net Profits Number of Employees

Level of Stock

Inde

x

Q3 2009 Q4 2009 Q1 2010

GDP

4.9%

Construction Sector

• Global construction sector currently driven by infrastructure spending as commercial

property undergoes correction

• Qatar construction firms less optimistic in Q1 amid softer sales outlook

• More business units expect prices to fall than rise

Residential Construction Outlook 2008-13Compound annual growth (%)

BOI – Construction Sector

1.1

5.1

2.6 2.2 1.9

-0.5

6.9

-3.3

-4

-2

0

2

4

6

8

World NonJapanAsia

Asia MiddleEast &Africa

SouthAmerica

EasternEurope

NorthAmerica

WesternEurope

Source: Global I nsight

13

31

-9

-3

-76

43

3

15

28

16

35

2420

-5

20 19

8

-20

-10

0

10

20

30

40

50

Volume of Sales

New Orders Level of Selling Prices

Net Profits Number of Employees

Level of Stock

Ind

ex

Q3 2009 Q4 2009 Q1 2010

Trade & Hospitality Sector

• Global wholesale/retail trade & hospitality sector is expected to pick up in 2010, but

recovery will be slow as consumers confidence remains weak

• Qatar Q1 outlook mixed with widespread concerns about profitability

• New orders points towards sustained recovery in demand going forward in 2010

BOI – Trade & Hospitality sectorGDP

3.3%

24

45

0

2522

31

-12 -5

232826

35

-163

15

-20

-10

0

10

20

30

40

50

Volume of Sales

New Orders Level of Selling Prices

Net Profits Number of Employees

Ind

ex

Q3 2009 Q4 2009 Q1 2010

Logistics & Communication Sector

• Global transport & communications sector expected to witness gradual recovery in 2010

• Rising concerns about profits as weak demand puts downward pressure on prices

• Half of respondents expect an increase in new orders as global trading activity resumes

BOI – Transport & Comm. sector

GDP3.3%

33 35

-10

2521

50 50

4

37

22

55

26

10

41

24

-20

-10

0

10

20

30

40

50

60

Volume of Sales

New Orders Level of Selling Prices

Net Profits Number of Employees

Inde

x

Q3 2009 Q4 2009 Q1 2009

Finance and Business Services Sector

• The Global Services PMI recovery has leveled out following extended recovery

• Qatar service sector bullish about current demand with increased optimism regarding

sales, prices and profit

BOI – Finance & Business Services sectorGDP9.9%

Global Services Purchasing Managers' Index

39.643

38.6 41.5 43.7 43.247.4 46.5

50.5 52.2 53 50.3 52.1

0

10

20

30

40

50

60

Dec-08

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09

Jul-09

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Source: J P Morgan and Markit Economics in association with ISM and IFPSM

Oil & Gas sector

• Half of surveyed firms in the Hydrocarbon sector expect selling prices to increase

• 48% expect to add new employees during Q1

GDP

61.7%OPEC Monthly Basket Price

50.2

69.56

76.2967.17

74.0172.6771.35

64.59

55.8141.41

45.7841.54

38.6

0

10

20

30

40

50

60

70

80

90

Dec-08

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09

Jul-09

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Other Key Highlights

•Availability of finance remains a key concern for many businesses in Qatar, reflecting global financial crisis aftermath •However, 42% of respondents expect borrowing conditions to improve during the quarter, only 5% expect a deterioration

•Manufacturing sector facing pressure due to higher raw materials cost

•More than one third of companies in the non hydrocarbon sector plan to invest in business expansion in Q1

•60% of companies in the hydrocarbon sector facing project delays

Conclusion

• Business Optimism levels in Qatar suffer a minor dip

• Majority of Non hydrocarbon sectors expect an increase in New Orders

• Qatar’s manufacturing industry shows a drop in net additional optimism with respect to sales, employees and stocks

• Improving liquidity in the international financial markets lifts optimism levels in Finance & business services sector

• Hydrocarbon sector optimism levels improve further due to higher crude prices

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