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Business Optimism Index Saudi Arabia – Q1 2009
Business Optimism Index usiness Optimism Index Saudi Arabia Q1 2009Saudi Arabia Q1 200919th January, 200919th January, 2009
Presented by Presented by Dun & BradstreetDun & BradstreetNational Commercial Bank National Commercial Bank
Business Optimism Index Saudi Arabia – Q1 2009
The D&B Business Optimism Index is recognized world over as an indicator which measures the pulse of the business community
Provides insights into the short-term outlook of the business community on investment, sales, profit growth etc
Analysis of major trends, outlook and issues concerning the business units
Widely used by policymakers and investors for assessment of business sentiment
Overtime it gives a composite index which emerges as a leading business indicator of turning points in economic activity
Business Optimism Index
Business Optimism Index Saudi Arabia – Q1 2009
Sample of business units representing the Saudi Arabian economy is selected
500 business owners and senior executives across business units surveyed
Conducted between November 16th and November 25th for the quarter starting January 2009
Respondents are questioned on their expectations for relevant business parameters
Hydrocarbon sector survey conducted separately Also surveyed respondents regarding current business
conditions vis-à-vis: investment plans, industry concerns, effects of global financial crisis
Survey
Business Optimism Index Saudi Arabia – Q1 2009
Overall business outlook upbeat
Demand outlook for the quarter remains firm
Most business units expect Net Profits to increase
Inflationary pressures to ease
61
47
32 30
57 59
8
33
18 20 2114
45
35
52
23 2024
0
20
40
60
80
100
Net Profit Number ofEmployees
Level ofSelling Prices
Level of Stock New OrdersReceived
Volume ofSales
%
0
20
40
60
80
100
%
Increase Decrease No Change
Business Optimism Index Saudi Arabia – Q1 2009
Buoyant demand drives business sentiments
59% business units expecting an increase in sales volumes
New Orders expectations high across all sectors
Construction and Real Estate sector set to defy tight financial condition
Volume of Sales
6067
56 5559
21 19 1925
211914
2520 20
0
20
40
60
80
100
Manufacturing,agriculture &
electricity
Construction Finance, Insurance,Real Estate &Business Ser
Trade, hotels,transport &
communication
Overall
%
Increase Decrease No-Change
New Orders
58 56 6055 57
18 19 1724
2024 26 23 21 23
0
20
40
60
80
100
Manufacturing,agriculture &
electricity
Construction Finance, Insurance,Real Estate &Business Ser
Trade, hotels,transport &
communication
Overall
%
Increase Decrease No-Change
Business Optimism Index Saudi Arabia – Q1 2009
Profits expectations high
Profitability expectations high across sectors Construction sector expects steady growth Trade, hotels & transports sector least upbeat
6166
6157 61
2520 21
2924
14 14 17 14 14
0
20
40
60
80
100
Manufacturing,agriculture &
electricity
Construction Finance,I nsurance, Real
Estate &Business Ser
Trade, hotels,transport &
communication
Overall
%
0
20
40
60
80
100%
I ncrease Decrease No-Change
Business Optimism Index Saudi Arabia – Q1 2009
Cautious about costs
New job creation to pace down
Business units expected to maintain inventory at last quarter levels
Finance sector to create most new job opportunities
Level of Stock
35
11
34 3019
6
2318
45
83
4352
0
20
40
60
80
100
Manufacturing,agriculture &
electricity
Construction Trade, hotels,transport &
communication
Overall
% Increase Decrease No-ChangeNumber of New Employees
4349
56
45 47
713
5 8 8
50
39 3948 45
0
20
40
60
80
100
Manufacturing,agriculture &
electricity
Construction Finance,Insurance, Real
Estate &Business Ser
Trade, hotels,transport &
communication
Overall
%
Increase Decrease No-Change
Business Optimism Index Saudi Arabia – Q1 2009
Downward pressure on prices
Selling Price expectations diminish
Real Estate prices expected to stay at last quarter levels
3026
36 36 3238
29 29 31 3332
46
35 33 35
0
20
40
60
80
100
Manufacturing,agriculture &
electricity
Construction Finance,I nsurance, Real
Estate &Business Ser
Trade, hotels,transport &
communication
Overall
%
0
20
40
60
80
100%
I ncrease Decrease No-Change
Business Optimism Index Saudi Arabia – Q1 2009
Sentiments positive despite sharp drop in global crude oil prices
Profitability expectations high
Significant employment growth in the sector
Oil & Gas sector
65 65
55
43
1318 20
33 33
1825
15
0
20
40
60
80
100
Net Profit Number ofEmployees
Level of SellingPrices
Cost of Extraction
%
0
20
40
60
80
100%
Increase Decrease No Change
Business Optimism Index Saudi Arabia – Q1 2009
Impact of global financial crisis
Most businesses feel the pinch of global financial crisis
Oil & Gas sector to be most affected
Finance & Construction sector resilient in these testing times
Non Hydrocarbon
53
46
42
59
35
47
50
37
11
7
8
4
0% 20% 40% 60% 80% 100%
Manufacturing,agriculture and
electricity
Construction
Finance,I nsurance, Real
Estate &
Trade, hotels,transport &
communication
Yes No Don't Know
Oil & Gas
80%
15%5%
Yes No Don’t know
Business Optimism Index Saudi Arabia – Q1 2009
Non hydrocarbon sector investment plans
Only few business units steer away from any new investments next quarter
Business expansion to be the top priority Finance and Real Estate sector to focus on investments in technology Manufacturing sector planning to invest in additional plant & machinery
22
34
41
18
30
14
13
13
11
9
7
7
32
34
37
59
5
9
4
2
0% 20% 40% 60% 80% 100%
Manufacturing,agriculture &
electricity
Construction
Finance, Insurance,Real Estate &
Business Services
Trade, hotels,transport &
communication
Addition to technology Plant & machinery w orkforce
Business expansion No investment
Business Optimism Index Saudi Arabia – Q1 2009
Escalation in costs considered a major roadblock
Availability of skilled labour a significant concern
Oil & gas sector most concerned about drop in oil prices
Business concerns
75
63
45
50
12
17
24
17
2
6
8
5
4
7
15
16
7
7
8
12
0% 20% 40% 60% 80% 100%
Manufacturing,agriculture &
electricity
Construction
Finance,I nsurance, Real
Estate &
Trade, hotels,transport &
communication
Price of raw materials Availability of skilled laborProperty prices/rent Rising cost of debtOthers
Non Hydrocarbon
25%
15%50%
10%
Rise in cost of operations Availability of skilled laborDrop in oil prices Others
Oil & Gas
Business Optimism Index Saudi Arabia – Q1 2009
Positive business sentiments despite financial crisis
Sales and profits levels to increase
Easing inflationary pressure
New Employment opportunities to pace down
New investments planned in Business expansion
Outlook for Q1 2009
Business Optimism Index Saudi Arabia – Q1 2009
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