NCB and Dun and Bradstreet's Business Optimism Index of Q3 reveals sentiments upbeat amid possible global economic recovery

The announcement was made during a press conference held at NCB head office in Jeddah yesterday.

The Business Optimism Survey for Q3 2009 was conducted in June 2009 amidst improving signs of a global economic recovery with oil prices soaring to their seven month high of $70 per barrel.

The BOI survey shows that business optimism in Saudi Arabia has improved substantially in Q309, as compared to Q209 with all business parameters reflecting a marked improvement over the figures of the last quarter figures.

The survey also reveals that despite global economic slowdown, the Saudi businesses have robust investment plans for Q3 as 36% of them plan to increase investment in business expansion while 42% are expected to maintain expansion expenditure at Q2 levels.

Commenting on the findings of the survey, Dr. Said Al-Shaikh, Senior Vice President and Chief Economist of the National Commercial Bank said:

"the results of the Business Optimism Index for the third quarter indicate an improvement in the sentiments of the local business community and depict a stronger confidence in the local economic climate for the three months to come. The positive connotations in these findings will reflect on the performance of the Saudi economy in the second half of this year. This direction was also pinpointed in the second quarter profits of Saudi companies, which have altogether affirmed consistency in growth and stability in the macro economy despite the repercussions of the global financial crisis on the business and financial sectors."

On his part, CEO of Dun and Bradstreet South Asia Middle East Ltd, Mr. Rajesh Mirchandani said: "In light of increasing signs of the global recession bottoming out, the outlook of the Saudi Arabian business community in the third quarter is looking more positive. The BOI for the overall profitability of the non-hydrocarbon sector has risen to 42 as against 12 in the previous quarter. This is backed by a surge in BOI for volume of sales which currently stands at 49 as compared to 12 during the last quarter. The study further confirms the current inflationary trend and cites that downward pressure on prices of goods and services will subside as BOI for the same has recovered from the lows of -18 in the last quarter and stands at -1 for the third quarter."

With the recent oil price rally, sentiments in the hydrocarbon sector have shown a marked improvement as the BOI for Net Profits now stands at 38 as compared to 23 in the second quarter. However, majority of the business units in the sector are uncertain on the sustainability of current oil prices as the BOI for Level of Selling prices for the hydrocarbon sector has retreated further to -23 as compared to -18 in the last quarter. Project delays still remain the major concern for the oil & gas companies. As of this quarter, 70% of the businesses in the sector expect the global recovery to start in 2010 as opposed to the 38% who polled last quarter.

As the latest addition to D&B's global series of Business Optimism Indexes, the Business Optimism Index on KSA, done in association with The National Commercial Bank, will be issued on a quarterly basis and will be one of the most effective ways to keep track of where businesses think the Saudi economy is moving. The next Business Optimism Index on Saudi Arabia will be released in September 2009.