Undaunted by the instability in the region about 51 percent of the companies in the non-hydrocarbon sector have plans to invest in business expansion, said Dr. Said Al-Shaikh, Group Chief Economist and Senior Vice-President of National Commercial Bank (NCB) in Riyadh, Tuesday.
Addressing a press conference to reveal the findings of NCB’s survey conducted in September to know the business optimism index (BOI ) for year end, he said about 51 percent of companies surveyed in the non-hydrocarbon sector have expressed their intention to invest in business expansion plans, as compared with 48 percent in Q3 2011.
However, Al-Shaikh said about 25 percent business units from non-hydrocarbon sector have expressed their concern over the shortage of skilled manpower in the Kingdom while 28 percent of the respondents from the hydrocarbon sector said they are concerned about the inflationary factors.
He said the NCB BOI revealed that 46 percent in the non-hydrocarbon sector do not anticipate any negative factors to influence their business operations in Q4 2011.
"The composite BOI in Saudi Arabia remains at an all-time high with a score of 63. The composite BOI gains were helped by government stimulus package," said Al-Shaikh. He said Saudi Arabia produced an average of 9.72 million bpd of crude oil in August, up from 9.068 million bpd in Q2 2011 and 8.732 million bpd in Q1 2011.
"This increase in production came to compensate for the oil disruption in Libya. However, oil production in Saudi Arabia will decline by 300,000 to 400,000 bpd as political stability in Libya restores by next year," he added. This will have an effect on the country’s GDP growth of 5.8 percent in 2011 will slow down to 2.2 percent in 2012, he said.
He said the composite BOI in the manufacturing sector dropped by seven points to stand at 49. The transport and communications sector optimism marginally declines for Q4 to 56 while construction and trade and hospitality sectors posted strong gains, he said without giving figures.
Manjeet Singh Chhabra, General Manager of Dun and Bradstreet South Asia Middle East Ltd., said the survey was done taking into account six parameters on current business conditions.
He said 500 business owners and senior executives across business units were surveyed by D&B/NCB BOI, which is recognized the world over as an indicator that reflects the pulse of the business community.
"Saudi firms remain quite optimistic about the business outlook for the fourth quarter; the hydrocarbon composite index is at an all-time high of 63 and non-hydrocarbon index is at 60. The construction sector’s optimistic outlook reflects the boost in confidence from the government’s planned expenditure in housing and other infrastructure projects,” Chhabra said.