The threat of worsening trading conditions after the recent unrest in parts of the Middle East still hangs over companies in the Gulf, even though broader business confidence is slowly improving, according to an HSBC study.
The study of 1,696 companies across the region showed 59 per cent of respondents expected the turmoil in areas of the Middle East to affect their businesses negatively. Of those, 8 per cent expected a large effect on their trade. However, the index of business confidence at Gulf companies rose 1.7 points from March to this month, with the UAE's business confidence rising 1.8 points from the end of the first quarter to 82.9.
Only Oman registered a decrease in business confidence between March and this month, falling 0.8 points.
"We've seen a clear upturn in confidence across the entire GCC region — and the UAE has gone from strength to strength this year," said Alain Renaud, the regional co-head of global banking at HSBC.
However, the recent political unrest, which has involved two revolutions and civil war in Libya, lingers over business owners in the region.
"The Arab Spring's impact on confidence was felt last quarter, but while this still remains a concern for companies … there are signs [they] are looking beyond this," Mr Renaud said.
More than half of the companies polled said their access to credit would remain the same, with a further 40 per cent saying availability of financing would be "somewhat" or "much" better.
Net loans in advances have risen 2.2 per cent since December to reach Dh1.05 trillion (US$285.87 billion) in April, according to UAE Central Bank data. Personal lending has fallen during that time, indicating an increase in availability of corporate credit.
While the regional unrest damaged business for some companies, there were also some benefits.
Richard Jones, the managing director of Coffee Planet, said high numbers of tourists diverted to Dubai provided a boost to its operations.
"One side of the business is flourishing, because we supply to the hotel sector," he said.
But, on the other hand, plans to open franchises in Bahrain and Egypt have been held back, Mr Jones said.