Optimism and confidence among the Gulf's business community declined further, the HSBC Gulf Business Confidence Survey for the third quarter of 2008 showed on Wednesday. It dropped to a mark of 92, the lowest since the survey began in February 2007. While two states - Bahrain and Saudi Arabia - registered a slight rise on the previous quarter, the confidence score in all other countries fell. However, given the survey was conducted as the global financial crisis deepened, regional equity markets fell and the oil price slumped, the results show a strong degree of resilience to global factors among the region's business people: 57 percent expect to see an increase in revenue in the next three months; 48 percent expect to increase their investment budget year-on-year; 47 percent expect to increase profits this year A large majority - 65 percent - said they thought the fourth quarter of 2008 would be much better or somewhat better than the previous quarter. In spite of these optimistic indicators, pressure is building on the region's private sector from a number of sources. The lowest number yet recorded - 47 percent - said they would be able to grow or maintain their profit margins, a clear sign of rising costs and increased competition. Staffing too remains a perennial problem, with only a third (32 percent) optimistic about keeping up with staffing requirements. This level has remained virtually constant since the survey began. Another threat to growth is identified as competition, with 27 percent citing this as the greatest challenge to their business, and only 38 percent expressing optimism about defending against competitive threats. “The expectation of revenue growth and plans for investment indicate that business sentiment in the region remains resilient,” said Tim Reid, Co-Head of Global Banking for HSBC in the Middle East. “The emergence of competition pressures as a threat to business is a reflection of the growth of the private sector and the arrival of new international competitors in the market.” Keith Bradley, HSBC's Regional head of Commercial Banking, said: “You would expect some caution to come into the market in difficult economic times. But the relatively strong outlook expressed by businesses in this survey serves as a reminder that the GCC is entering a slowdown, not a recession, and that these economies will continue to grow.” The third quarter Survey of 2008 surveyed 1,524 respondents from all six GCC countries, with the majority coming from Saudi Arabia and the UAE. The HSBC GCC Business Confidence Index appears quarterly, and will track business sentiment in all six countries of the GCC. The Gulf Business Confidence Index is calculated using the results from the first quarter of 2007 as a base, with a score of 100. This and future indices will show a deviation from that base to indicate rising or falling levels of business confidence. A score greater than 100 indicates a shift in the positive direction. A score lower than 100 indicates that business confidence is showing a negative trend. __
