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Saudi Arabia Business Optimism Index – Q1 2013

Saudi Arabia Business Optimism Index – Q1 2013. Presented by Dun & Bradstreet South Asia Middle East Ltd. (D&B) National Commercial Bank (NCB). Business Optimism Index.

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Saudi Arabia Business Optimism Index – Q1 2013

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  1. Saudi Arabia Business Optimism Index – Q1 2013 Presented by Dun & Bradstreet South Asia Middle East Ltd. (D&B)National Commercial Bank (NCB)

  2. Business Optimism Index • The D&B Business Optimism Index is recognized the World over as an indicator which reflects the pulse of the business community • Provides insight into the short-term outlook of business units on key business parameters including sales, profits, pricing, headcount and investment • Provides analysis of major trends and issues concerning the business community

  3. Survey • Sample of business units representing Saudi Arabia’s economy is selected • 500 business owners and senior executives across business units are surveyed • The Q1 2013 survey was conducted during December 2012

  4. Survey • Respondents are questioned about their expectations on relevant business parameters • Survey also captures respondent feedback on current business conditions

  5. Composite Business Optimism Index • The Composite Index is calculated separately for the hydrocarbon and non- hydrocarbon sectors • To provide further analysis of the non-hydrocarbon sector, composite indices are calculated for each of the five economic subsectors

  6. World Economic Outlook Real GDP Growth (%) Global composite manufacturing & services PMI Source: EIU Source: JP Morgan and markit economics • Global growth to strengthen in 2013 from the previous year • Global composite PMI touches a nine-month high in December 2012

  7. Mining & Quarrying sector growth estimated at about 6% in 2012 Real GDP growth for 2012 recorded at 6.8% All key sectors witnessed GDP growth in 2012. Economy of Saudi Arabia Mining & Quarrying and Total GDP at Constant Prices (SAR mn) GDP by Kind of Economic Activity at Constant Prices (SAR mn) Source: CDSI * Preliminary Source: CDSI

  8. Composite Business Optimism Indices Hydrocarbon sector Non-hydrocarbon sector • Hydrocarbon sector optimism rises to 33 on strong profitability and hiring outlook • Strong sales, new orders and profitability outlook lifts non-hydrocarbon sector index

  9. BOI Trends: Non-hydrocarbon Sector 2009 2010 2011 2012 2013

  10. Manufacturing Sector Global Manufacturing Purchasing Managers’ Index Source: JP Morgan and markit economics • Global Manufacturing expands in December 2012 for the first time since May • Optimism levels in Saudi Arabia’s manufacturing sector jumps on strong sales and new orders

  11. ConstructionSector • Global construction sector growth expected to be moderate in 2013 • Saudi Arabia’s construction sector holds the most optimistic outlook among all sectors for the sixth quarter in a row

  12. Trade & Hospitality Sector • Global retail sector to face challenges in 2013 as global growth remains uncertain • Composite BOI for the sector rises on strong sales, new orders and profitability outlook

  13. Transport & Communications Sector • Global transport sector growth remains subdued given slow recovery of the trade sector • Sector’s BOI moderates as most parameters slide

  14. Finance, Real Estate & Business Services Sector Global Services Purchasing Managers’ Index Source: JP Morgan and markit economics • Global Services PMI touches a eight month high in November, held steady in December 2012 • Optimism levels in the sector rise to 51 as most parameters improve

  15. BOI Trends: Hydrocarbon Sector Business Optimism Indices OPEC monthly basket price (US$/barrel) • OPEC has forecasted that oil demand will grow at around 0.8 million bpd in 2013 • The composite BOI improves on strong profitability and hiring outlook • OPEC has forecasted that oil demand will grow at around 0.8 million bpd in 2013 • The composite BOI improves on strong profitability and hiring outlook

  16. Other Key Highlights • 41 % Saudi businesses feel that there will be no negative factors impacting their business operations in Q1 2013 • Availability of skilled labor is the leading concern for both the hydrocarbon and non-hydrocarbon sector businesses • 57% of companies in the non-hydrocarbon sector intend to invest in business expansion compared to 59% in Q4 2012

  17. Conclusion • Business optimism improves in the following non-hydrocarbon sectors: Manufacturing, Construction, Trade, Restaurants & Hotels and Finance, Insurance, Real Estate & Business Services • All six parameters in the non-hydrocarbon sector evince an upward trend • Hydrocarbon sector optimism improves with a rise in profitability expectations and improvement in the hiring outlook

  18. THANK YOU

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