Gulf business confidence drops, led by UAE, Bahrain

Business confidence is falling across the GCC with Bahrain and the United Arab Emirates the most pessimistic in the six-nation group, according to the Arabian Business Business Confidence survey.

The survey, which recorded the opinions of over 500 business people from across the GCC over a four week period, asked respondents if they expected overall economic conditions in six months to be better, the same or worse than they were presently.

The survey found only two countries with a greater percentage of business people predicting deteriorating economic conditions over improving conditions - the United Arab Emirates and Bahrain.

In total 26.3 percent of business people polled in the UAE believed economic conditions would improve over the next six months, while 30.4 percent said they saw economic conditions weakening.

In Bahrain 28 percent of respondents said they saw economic conditions improving, versus 32 percent who said they expected the business environment to become more difficult.

Inflation in the UAE hit 11.1 percent in 2007, its highest level in 20 years. In Bahrain, which unlike the UAE publishes monthly statistics, inflation accelerated to 6.2 percent in April, compared with 5.24 percent in March, on rising food, drink and tobacco costs.

More worrying for the region as a whole is that overall business sentiment is deteriorating.

Data collected in the second half of June revealed a growing number of business people believing the economic environment would worsen.

Around 35.5 percent of respondents who completed the survey in the second half of the month said it would be harder to do business in six months time, up from 22 percent in the first two weeks.

The most optimistic nations in the GCC according to the Business Confidence survey were Saudi Arabia and Oman.

Over 70 percent of Oman-based respondents predicted improving economic conditions, while in Saudi Arabia over 51 percent of the business people polled predicted a better business environment in six months.

The Arabian Business Business Confidence Survey correlates with the findings of Maktoob Research's study of how happy people are in the GCC, suggesting business confidence contributes to a sense of well being.

According to Maktoob's survey, Omanis and Saudis are the happiest people in the GCC. In total 61 percent of Omanis said they were happy, with Saudi scoring 57 percent, Qatar 56 percent, Bahrain 54 percent, Kuwait 53 percent and the UAE 52 percent.

The Arabian Business survey also asked respondents to measure their company's level of business confidence by giving a score of between one and 10 (with one being the lowest level of confidence).

The findings across countries was markedly uniform with an average score of 6.56. That fell through the month with the average falling to 6.47 for the last two weeks of June.

Kuwait-based business people were the most optimistic about their companies, with highest percentage of respondents clustered around the nine mark.

In the rest of the GCC, the highest cluster was around an eight. The Arabian Business Business Confidence index will track how this changes over time.

There was also little variation when it came to the size of companies. The most pessimistic over the future of the economy were the largest companies - those with over 1000 employees - where 29.9 percent of respondents predicted worsening economic conditions.

Companies with between 501 and 1000 employees were the most optimistic - with 50 percent of respondents predicting improving economic conditions.

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