By Santhosh V Perumal/Business Reporter
Qatar Inc has exhibited “cautious optimism” in the second quarter (Q2) of this year amid a weak outlook for the country’s hydrocarbon and non-carbon sectors, according to Business Optimism Index (BOI) of the Qatar Financial Centre (QFC).
Revealing a weakening optimism for the hydrocarbon sector, both on a quarterly and annual basis, the composite BOI for the hydrocarbon sector stood at 5 in Q2, 2015 versus 15 in the previous quarter and 8 in the comparable quarter a year ago.
The study said 52% of the respondents expect their sales volumes to remain unchanged during Q2, 2015, while 38% anticipate a rise owing to new projects and higher orders; both from new and existing customers.
The BOI for selling prices has weakened to -5 in Q2, 2015 from 3 in Q1, 2015 and 5 in Q2, 2014. In line with the softening outlook for sales volumes and selling prices, the BOI for net profits has declined quarter-on-quarter but is slightly higher when compared year-on-year; it stands at 8 in Q2, 2015, compared to 30 in Q1, 2015 and 5 in Q2, 2014.
A higher proportion (58%) of the hydrocarbon sector firms indicated no plans to invest in business expansions during Q2, 2015, compared to 50% in the previous quarter. But 33% reported that they will invest in such activities while the remaining 9% are unsure.
Despite a weaker composite BOI reading, respondents are modestly more optimistic regarding the business environment outlook as 27% of the survey participants expects no negative factors to impact their business operations in Q2, 2015 against a corresponding 22% in the previous quarter.
While the impact of falling oil prices is the major concern for firms in the hydrocarbon sector, the BOI said competition continues to be the leading concern for firms in the non-hydrocarbon sector.
The composite BOI for the non-hydrocarbon sector has also witnessed a drop in Q2, 2015 vis-à-vis the previous quarter and the same quarter a year ago as all the parameters constituting the index have declined. The index stands at 41 in the current quarter, down from 53 in Q1, 2015 and 47 in Q2, 2014.
The BOI for sales volume is lower by 13 points to 50 in Q2, 2015 compared to 63 in Q1, 2015.
Despite the falling BOI trend, a majority 60% of the sector respondents expect an increase in sales volumes on the back of rising demand, new orders and upcoming projects.
The outlook for the construction sector has witnessed a slight moderation with the composite BOI declining from 52 in Q1 to 46 in Q2; the composite BOI for transport & communications sector is lower by 9 points to 40 in Q2.
The composite BOI for the finance, real estate & business services sectors has retracted significantly from the record highs achieved in Q1.
Despite these challenges, Qatar’s economy continues to thrive and drive business in all sectors, said Yousuf al-Jaida, deputy chief executive of QFC Authority “It’s no surprise that Qatar’s overall business environment outlook has improved in both the hydrocarbon and non-hydrocarbon sectors.”
In the hydrocarbon sector, 33% firms have planned expansion and investments during Q2, 2015 against only 15% in Q1, 2015. The trend has remained stable for non-hydrocarbon firms as 36% intend on taking up expansionary activities in the current quarter, the same level as in Q1, 2015.
Al-Jaida: Qatar’s economy continues to thrive and drive business in all sectors.
