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Saudi Arabia Business Optimism Index – Q1 2011

Saudi Arabia Business Optimism Index – Q1 2011. 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 2011

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  1. Saudi Arabia Business Optimism Index – Q1 2011 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 2011 survey was conducted during December 2010 • Respondents are questioned about their expectations on relevant business parameters • Survey also captures respondent feedback on current business conditions

  4. Composite Business Optimism Index • The Composite Index is calculated separately for the hydrocarbon and non hydrocarbon sector • To provide further analysis of the non hydrocarbon sector Composite Indices are calculated for each of the five economic subsectors

  5. World Economic Outlook Real GDP Growth Global composite manufacturing & services PMI Source: IMF October 2010 forecast, Q2 figures are actuals Source: JP Morgan and markit economics • Global economy to be characterized by dual speed growth • Advanced economies growth estimated at 2% in contrast emerging & developing economies to grow at 6.4% • The global economic recovery continued in November; global composite PMI showed expansion for the sixteenth consecutive month

  6. Saudi Arabia’s non-oil sector projected to grow at 4.6% in 2011 In H1 2010 nominal GDP grew by 24.1% over the H1 2009 figure, due to recovery in oil prices and production and also on account of the low base effect of H1 2009 Economy of Saudi Arabia Source: IMF Source: CDSI

  7. Composite Business Optimism Indices Non-hydrocarbon sector Hydrocarbon sector • Non-hydrocarbon sector optimism surges to an all time high • Strong demand and profits expectations lift composite index for non-oil sector • Hydrocarbon sector remains upbeat in Q1 2011

  8. Business Optimism Indices Trends : Non Hydrocarbon Sector 2009 2010 2011

  9. Manufacturing Sector Global Manufacturing Purchasing Managers’ Index Source: JP Morgan and markit economics • The Global Manufacturing Purchasing Managers’ Index hits a six month high of 55 in December • Saudi manufacturing sector optimism surges • Demand levels and profitability expectations bolster composite BOI

  10. Construction Sector • The global construction sector will recover in 2011 • Saudi’s construction sector optimism increases as profitability and hiring outlook strengthens

  11. Trade & Hospitality Sector Improving consumer confidence will lift global trade & hospitality sector in 2011 Composite index rises to an all time high of 68 Level of Stock is the only parameter that registered a decline in its BOI score

  12. Transport & Communications Sector Global shipping industry is recovering, air freight is also posting growth Saudi transport & communications sector optimism increases to its highest level due to surge in demand and profitability outlook

  13. Finance, Real Estate & Business Services Sector Global Services Purchasing Managers’ Index Source: JP Morgan and markit economics • The Global Services PMI for the month of December stands at 57.3, posting the fastest rate of expansion since July 2007 • Saudi service sector optimism strengthens on rise in optimism in all five parameters

  14. Business Optimism Indices Trends : Hydrocarbon Sector OPEC monthly basket price Business Optimism Indices • Oil prices increased in December on demand optimism • The composite BOI index remains steady as hiring outlook increases, but selling price BOI drops

  15. Other Key Highlights • Raw material costs is the leading concern for non hydrocarbon segment, 58% of the respondents feel it will influence operations • Shortage of skilled labour is a concern for 21% of the business units in the non hydrocarbon sector • 45% of companies in the non-hydrocarbon sector intend to invest in business expansion compared to 37% in Q4 2010 • 48% of companies in the hydrocarbon sector cite project delays as the major factor impacting their business

  16. Conclusion • Business optimism surges in all sectors in the Saudi Arabian economy • Level of Stock index remains static versus prior quarter; all other indices post large gains as global and domestic economy recovers • Inflationary pressures strengthen in Q1 2011 • Demand optimism strong for all sectors • Hydrocarbon sector displays a surge in hiring outlook backed by steady oil prices and output

  17. THANK YOU

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