The latest update of the bank's quarterly survey shows that from a base level of 100 at the end of the first quarter of 2007, business confidence has fallen steadily to 96.8 over the last 12 months.

The survey also shows that the percentage of businesses surveyed who identify inflation as a significant problem has nearly doubled, from 36 per cent at the end of the first quarter of 2007 to 61 per cent at the end of the first quarter of 2008.

The survey also showed a decline in expectation of a currency revaluation. At the end of 2007, 59 per cent of respondents were expecting a revaluation of their local currency, while three months later that number has fallen to 41 per cent.

Nearly 1,500 people from across the GCC responded to the survey.