Sentiment in Kuwaiti businesses is brightening in the next quarter as hydrocarbon sectors record a BOI (Business Optimism Index) of 46 and sectors focusing on non-hydrocarbons record a 54 BOI, according to experts in the financial field. Phil Strange, CFO of Dun & Bradstreet’s South Asian Middle East division, who spoke at a press conference held in Kuwait City’s JW Marriott. Strange stated that the BOI in non-hydrocarbon sectors is at record high levels not seen since the reporting started in the third quarter of 2009. He noted that this trend is an indication that the impacts of the worldwide economic recession are receding.
Strange added that rising demands spurned by spending in both the public and private sectors have been positive for the Kuwaiti economy, just as healthy oil prices have been. D&B offered their first quarter report for 2011 to the media, focusing on all relevant sectors. The financial rating firm out of Dubai made note that the non-oil sectors in Kuwait had experienced marked improvements in the levels of optimism for the first quarter of 2011. Strange said that the composite BOI for the businesses outside of the hydrocarbon sector have risen 15 points from the last quarter of 2010 to the first quarter of 2011.
The D&B survey covered 500 leading firms in Kuwait and compiled these accurate and robust results. The firms were asked about their volume of sales, revenue, net profits and the levels of both stock and employment. Strange noted that the impacting factors for businesses in the first quarter were the same as those that were stated in the quarter previous. The two major factors that were noted as having the most impact on business in the first quarter of 2011 were the availability of financing and the cost of raw materials.
In regards to Kuwait, the country’s economy is on solid footing thanks to oil revenue, even when facing a global recession. There is a massive budget surplus made even larger when oil prices are peaking. These numbers help with economic stimulation at any point in a worldwide recession. Strange noted that the nation’s multi-billion development dollars are supporting the levels of optimism in Kuwait.
There was a budget surplus of KD6 billion in the nation during the first few months of the fiscal year that finished up in March 2010. Predictions from the IMF put the Kuwaiti economy at 4.4 percent growth for the coming year, up from 2.3 percent expansion in 2010. Ahmad Abu Blan commented on whether the political instability in the Arab world would have an effect on the projections. The business development manager for D&B stated that the survey was completed prior to the Tunisian overthrow that occurred in December of 2010, when the Egyptian political landscape was silent. He noted that people at D&B feel these were isolated cases, but are expecting the second quarter to confirm or disprove that. He added that the reporting is more exciting given the circumstances.
Based on the report’s findings, optimism within the manufacturing industry has risen 17 points to reach 50 points in the first quarter of 2011. Within the construction sector the positive feelings about profitability, sales and employment have resulted in optimism increases in the first quarter, going up five points to hit 51.
D&B’s report showed that the most impressive rebound occurred in the sector focusing on international transport and logistics. It revealed that carriers in the Middle East have seen record expansions within capacities, increasing 13.7 percent in October over the same period from the year before. This sector is ripe with optimism even after moderation within the sales figures, new orders and operating parameters, according to the report.
There has also been optimism throughout the real estate and financing industry, based on the D&B findings. This sector has seen shift recoveries in the level of optimism within selling price parameters and in sales for the first quarter of 2011. Sales volumes have increased 42 points to reach 69 at the same time the parameters in selling prices have increased 40 points over the last quarter to hit 45, according to the report.Paul Holdsworth, Staff Writer, Gulf Jobs Market News