Business Optimism Index Kuwait Q4 2009 Presented by Dun & Bradstreet South Asia Middle East Ltd...
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Transcript of Business Optimism Index Kuwait Q4 2009 Presented by Dun & Bradstreet South Asia Middle East Ltd...
Business Optimism Index Kuwait Q4 2009
Presented by Presented by Dun & Bradstreet South Asia Middle East Ltd (D&B) Dun & Bradstreet South Asia Middle East Ltd (D&B) Muthanna Investment Company (MIC) Muthanna Investment Company (MIC)
Business Optimism Index
• 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 businesses
on sales, profit growth, investment etc
• Provides analysis of major trends, outlook and issues
concerning businesses
Survey
• Sample of business units representing Kuwait’s economy was
selected
• 500 business owners and senior executives across business
units were surveyed
• Survey conducted during September 2009 for the 4th quarter of
2009
• Respondents were questioned about their expectations on
relevant business parameters
• Survey also captured respondent feedback on current business
conditions
World Economic Outlook
• IMF revises world economic growth to -1.06% in 2009, recovery expected in 2010
with 3.1% growth
• Advanced economies are expected to contract by 3.4% in year 2009, growth in 2010
projected at 1.3%
• World trade volumes set to expand in 2010 by 2.5%
• GCC growth to rebound to 5.2% in 2010
World Stock Markets
Kuwait’s economy
Source: IMF
Source: IMF
• Kuwait’s GDP to register a growth rate of 3.3% after contracting by 1.5% in 2009; Non-oil GDP to grow at 4.1% in 2010
• Drop in trade volumes, lower hydrocarbon prices and productions will lead to a contraction in exports by 32.59% in 2009, sharp recovery expected in 2010.
• Kuwait has posted a preliminary budget surplus of KWD 4.25 bn in first five months of the current fiscal on the back of firm oil prices
Business Optimism Indices : Q4 2009
• All parameters in the non-hydrocarbon sector register improvement in Q4 2009 as
compared to the previous quarter
• No improvement in the selling price outlook for Q4 2009 in the hydrocarbon sector;
Net Profits and Number of Employees optimism modest
All parameters in the hydrocarbon for Q4 2009 improve, Level of Selling Prices turns positives
Business Optimism Indices Trend
Manufacturing sector
• The Global Manufacturing Purchasing Managers’ Index stands at 53 in September
• Improvement in outlook for Q4 as compared to Q3
• 54% expect an increase in sales volumes, 51% foresee a better order book status and
54% of companies expect higher profits in Q4 2009
• A substantial 83% expect no change in selling prices in Q4 2009
Source: J P Morgan and market economics in association with ISM and IFPSM
Construction sector
• Construction sector worldwide is expected to be mainly driven by policy measures and
some stability in demand conditions
• Kuwait’s construction sector has displayed a strong rebound in outlook for all
parameters due to boost from government spending
• 58% of the respondents expect higher sales and a same number of respondents expect
higher profits in Q4 2009
Infrastructure construction growth 2008-13 compound annual growth (%)
Trade, restaurants & hotels sector
• Global trade & hospitality sector has been impacted due to rising
unemployment and falling consumer spending
• Expectations of higher sales boost profitability expectations despite a
bleak selling price outlook
• Level of Selling Prices parameter weakest among all sectors; 32%
foresee a drop in selling prices in Q4
• Drop in trade volumes has impacted the transport and logistics sector across the world
• Optimism about improvement in order books and rise in sales volumes lifts profitability expectations
• 29% of respondents foresee increase in Level of Selling Prices; BOI improves to 13
Transport & communication sector
Finance, insurance, real estate & business services sector
• The Global Services PMI crossed the level of 50 after contracting for 10
consecutive months; September reading stands at 52.2
• Sector optimistic on volume of sales and new orders with 55% of the
respondents respectively expecting higher numbers for both parameters
Source: J P Morgan and Market Economics in association with ISM and IFPSM
Business Optimism Indices Trends : Hydrocarbon sector
• 84% of the firms expect selling prices to remain unchanged, 58% anticipate a rise in employee count
• 73% foresee higher profitability in Q4 2009
Other Key Highlights
• Availability of finance and raw material costs cited as leading
business concerns by the non-hydrocarbon sector
• 54% of the business units freeze investment outlays while
only 35% to invest in business expansion
• 43% of the business units in the non-hydrocarbon sector
expect borrowing conditions to improve
• Discovery & development cost identified as the chief concern
by 38% of the units in the hydrocarbon sector
Conclusion
• Business outlook for Q4 improves across sectors with emerging signs of global economic revival and government support through expansionary fiscal policy
• Activity in finance, insurance, real estate & business services sector is expected to improve with signs of increased liquidity in the international markets
• Optimism in the trade, restaurants & hotels sector gains traction as global trade improves
• Hydrocarbon sector uncertain on recent crude price rally amid weak fundamentals