Renewed optimism due to strength of economy
In the Q1 2014 Business Optimism Index (BOI), with the composite index at 49, the business sentiment in Qatar’s non-hydrocarbon sector stands at the second highest level in three years.
Renewed business optimism, according to Yousef M. Al Jaida, chief strategic development officer, Qatar Financial Centre Authority, is the strength of Qatar’s economy and the expectation that it will continue to display solid growth in 2014 on the back of implementation of large infrastructure projects and a fast-growing population which will bolster domestic demand. “The country’s economic growth accelerated to 6.2 percent year on year in Q3 from six percent in Q2,” added Al Jaida.
“This performance owed much to the rapid expansion of different sectors. The non-hydrocarbon sector as a whole grew 9.5 percent year on year in Q3 of 2013,” said Al Jaida, adding that trade, restaurants and hotels, construction, transport and communication, financial, real estate, business services, and domestic services enjoyed double-digit growth.
“The transport and communication sector grew at 13.9 percent year on year, driven by the Ramadan festival, which boosted travel and tourism, as well as a higher number of mobile phone subscribers. The financial, real estate, and business services sector grew 10.5 percent year on year, as real estate services were boosted by the growing population, while the construction sector, grew at 13 percent as Qatar’s infrastructure development gathered momentum.”
In addition, more expatriate workers are coming to Qatar to meet higher labour demand for infrastructure projects. The influx will fuel economic growth by boosting domestic demand for services and investment in housing and other infrastructure projects.
Reflecting the general strength of optimism, 68 percent of non-hydrocarbon sector respondents foresee an increase in sales volumes in Q1 2014 as they expect market conditions to improve and expanding demand to bring more business opportunities.
Of the non-hydrocarbon sector respondents, 48 percent do not anticipate any negative factors impacting business operations in Q1 2014 compared to 72 percent in Q4 2013. Analysing this pattern, Al Jaida told The Edge that the main cause of this change in sentiment is that the intensity of key challenges affecting business operations in Qatar has increased in the current quarter. Rising competition is a leading challenge identified by 12 percent of the sector respondents – marginally higher than the previous quarter’s tally of 10 percent. Slow demand is another challenge facing 10 percent of the businesses, up from three percent last quarter. Delays in receiving payments are an important concern for eight percent of respondents, while five percent are concerned with government regulations, and three percent each are affected by availability of finance, skilled labour and inflation.