The business confidence among the small and medium-sized enterprises (SMEs) in the Middle East region is at a new high with Qatar topping the list, according to a new survey by HSBC.

Across the region, a growing proportion of small businesses are optimistic for their prospects in 2010 signaling increasing capital investment and recruitment, said the survey conducted by research agency TNS for HSBC bank.

The semi-annual 'HSBC Small Business Confidence Monitor' gauges the six-month outlook of SMEs on local economic growth, capital investment plans and recruitment.

This was the first time that Middle East countries were included in the list of 20 markets, capturing the views of more than 6,000 SMEs in Asia, the Middle East, Europe, North America and Latin America – the largest international survey of its kind.

Qatar business confidence in the fourth quarter of 2009 was the highest at 159 points followed by Saudi Arabia at 125 points and Egypt at 110 points, it added.

Globally, the SME indices tracked by HSBC in most countries and territories hold a positive outlook, with the Middle East at 125, Latin America at 118, the US and Canada at 107 and the UK at 101. France is just below neutral at 94.

The most interesting fact was that emerging markets in Asia, the Middle East, Latin America and Eastern Europe were significantly more optimistic than the developed markets of the US, Canada, the UK and France, with an average index of 121 versus 106, the report added.

The results were used to calculate an index ranging from 0 to 200 where 200 represents the highest confidence level, 0 represents the lowest, and 100, neutral. The survey was conducted in October and November 2009 by TNS, said a top HSBC official.

“Confidence levels appear to be back to pre-financial crisis levels. The Middle East outlook correlates strongly to the global emerging market outlook, and as a major international trading hub, the region is well-placed for future growth,” Nicholas Levitt, regional head of Business Banking HSBC said.

About 47 per cent of the region’s SMEs expect local GDP growth to increase over the next six months, while 36 per cent expect the pace to remain the same, and only 17 per cent expect growth to slow, he noted.

The Middle East region is the second most confident region, after India when it comes to investing in their own businesses in the first half of 2010. About 47 per cent are planning to boost their capital expenditures, 41 per cent say they will maintain current levels and only 11 per cent are planning reductions.

According to Levitt, recruitment sentiment in the Middle East was strongest globally. About 36 cent of the region’s SMEs said they will increase staff in the next six months, while 58 per cent said they will keep staff levels the same.

On the extent of their cross-border trade and overseas operations, three in 10 SMEs surveyed said they had some level of cross-border trade or international business. In Qatar, the number is nearly 7 in 10.

In Qatar 69 per cent of SMEs surveyed said they were involved in international business, in Saudi Arabia it was 27 per cent and in Egypt 33 per cent.

When SMEs were asked if they plan to engage in international business in the next two years, 72 per cent of Qatar SMEs planned to grow their international business. In Egypt it was 28 per cent and in Saudi Arabia 19 per cent, the report added.

'Top reasons for doing business internationally are the sales and revenue opportunities as well as access to international markets as SMEs seek to diversify their risk beyond domestic markets,' Levitt said.

According to him, there is a rebalancing of the world economy, and emerging markets are becoming more and more important as a driver of growth.

'Small businesses are at the heart of this growth, driving local job creation, investment and productivity. And as they grow and develop and look to world markets for new opportunities, HSBC are uniquely placed, with its international connectively and its on-the-ground expertise, to help small business unlock its global potential,' he added.-TradeArabia News Service