A rebound in world commodity prices, revival of the global markets, recovery in world trade, Qatar?s successful bid for World Cup 2022 and subdued inflation expectation have put business confidence on an upward track in world?s the fastest growing economy in the first quarter (Q1) of this year, says a study.

According to Dun and Bradstreet (D&B), "The Qatari business community is on a high, certainly in the non-hydrocarbon sector where optimism is approaching pre-financial crisis and global recession levels."

"A combination of current economic good news both domestically and internationally and the longer term award of the 2022 FIFA World Cup to Qatar is significantly buoying sentiment," Phil Strange, chief financial officer, D&B (Middle East and South Asia) said while releasing the business optimism index (BOI), jointly undertaken with the Qatar Financial Centre Authority (QFCA).

The survey for the BOI Q1 2011 was conducted in December 2010 amidst an environment where many economic analysts were of the view that the global economy will post strong growth of about 4% in 2011; a slightly slower pace than in 2010.

Overall, the business sentiments for Q1 reflect the fast pace of growth of the Qatari economy, it said. "The optimism levels amongst Qatar?s non hydrocarbon business community are as high as it has been in the last nine quarters.

" Despite the delicate global financial system, characterised by fragile corporate and sovereign balance sheets, 48% of the respondents in the Qatari finance, real estate and business services sector say that they will invest in business expansion during the first quarter of 2011," said QFCA acting CEO Shashank Srivastava.

Although there was a marginal dip in the composite index for the hydrocarbon sector to 30 from 40 in the last quarter of 2010 due to a lower BOI score for selling prices, the survey said the price of Opec basket averaged $88.5 a barrel in December; the highest monthly average in two years.

"These oil price highs have led respondents to move more to a prediction of stable prices at these levels as opposed to continuing increases," D&B and QFCA said, adding the net profits expectations of the sector from the respondents have improved; the BOI of which is recorded at 50 against 18 in the previous last quarter (Q4 2010).

The composite index for the non-oil sector has surged to 61 in Q1 2011; influenced by improved demand forecasts, it said, adding the non-hydrocarbon sector witnessed "significant" gains in momentum with the construction sector leading those gains.

Highlighting that in Q4 2010 survey respondents were somewhat ?cautious? owing to the uncertain global recovery with the US engaging in quantitative easing, the eurozone debt crisis boiling and a currency war threatening, it however said ?buoyancy in oil prices in the last quarter in conjunction with strong domestic growth has brought about a surge in sales and profits optimism in the New Year."

The strength of business optimism in these key areas is also driving expectations for new orders and employment as firms anticipate an improvement in order books and take on new staff to meet the expected demand, according to the BOI.

"Inflation is expected to remain subdued as rents, which carry the maximum weight in the consumer price index basket, are expected to remain low," it said.

About the factors impeding business, the BOI found that raw material costs continue to be the top concern for non-hydrocarbon firms in Q1 2011 with 43% of the respondents having cited it as the leading concern.

Availability of skilled labour is the second most important factor for respondents with 23% citing it accordingly. Availability of finance is the biggest concern for 20% of the respondents while property prices are the largest factor impacting business for 14% of respondents, according to the survey.

In the oil and gas segment, project delays are the chief factor impacting business while finding skilled labour is also an important issue.

Phil Strange, Chief Financial Officer, D&B (Middle East and South Asia)

 Read the article in Gulf Times