15 May 2013
Business enterprises in the Kingdom continuing hiring under the national plan will have to overcome the headwinds facing the global economy to reach a sustainable path, a top Saudi economist said yesterday.
Said Al-Shaikh, NCB senior vice president and group chief economist, made this observation at the launch of the second quarter survey on business optimism index (BOI) report conducted by the bank.
Referring to the second quarter survey made recently by NCB, Al-Shaikh said the survey covering the nonoil and gas sector showed that 56 percent plan to increase their headcounts in the second quarter, whereas 42 percent anticipate no change.
But the availability of skilled labor has been a matter of concern by 20 percent of the sector, while 13 percent have cited government regulations as a key challenge.
Some 8 percent anticipate low demand for products/services to be a chief concern for their business.
Answering a question about the impact of the foreign labor leaving the country on the Saudi economy in line with the current Saudization drive, he told Arab News: "This is not going to happen immediately as the labor directives require many of these workers to remain, but in line with the regulatory measure."
He clarified that skilled manpower shortage, especially in the oil sector, is a global phenomenon and not confined to Saudi Arabia alone.
Outlining the highlights of the survey, he said: "Composite BOI for the hydrocarbon sector declines marginally to 31 in Q2 2013 from 33 in the previous quarter; for the non-hydrocarbon sector it remains constant at 55 in Q2 2013."
He said: "Majority of the respondents in the non-hydrocarbon sector (51 percent) and hydrocarbon sector (48 percent) cite that there are no negative factors that will impact business in this quarter."
NCB, in association with Dun & Bradstreet South Asia Middle East Ltd. (D&B), released BOI survey for Saudi Arabia for Q2 2013.
The survey revealed a cautionary approach in the Saudi community.
It is apparent that the continued improvement in bank credit conditions along with strong government investment spending in physical and social infrastructure has made the construction sector the most optimistic among other sectors, as demonstrated by the rise in the construction BOI to 65 points.
"Moreover, reflecting this overall continued optimism, 58 percent of the oil and gas sector companies surveyed indicated they would invest in business expansion, while 51 percent of the companies in the nonoil and gas pointed out that they would invest in business expansion in Q2 2013," Al-Shaikh added.
He said there was no doubt that the continued accommodative monetary policy along with the prudent economic and fiscal management opted by the Kingdom had played a pivotal role in maintaining the high level of optimism of the business community in Saudi Arabia.
The survey for Q2 2013 was conducted in March 2013.
Talking about some actors impacting business, he said that in the non-hydrocarbon sector, 54 percent of the respondents had indicated that there are no negative factors affecting their business operations in Q2 2013.
Availability of skilled labor has been cited as a concern by 11 percent of the respondents, while 10 percent have indicated fluctuating demand for products/services to be the major challenges for their business.
Some 8 percent of the respondents have cited government regulations to be their chief concern, while 6 percent each have responded that competition and inflationary factors are the key challenges affecting their business. Only 4 percent of the businesses have highlighted availability of finance as a factor hampering business.
A majority (51 percent) of the companies in the non-hydrocarbon sector have said that they would invest in business expansions in Q2 2013, while 22 percent have said they would not. The remaining 27 percent are unsure about business expansion plans in Q2 2013. When compared to the previous quarter, the manufacturing sector continues to be the most optimistic with reference to business expansion plans.
Competition and inflationary factors each are the leading concerns for 5 percent sector respondents. As many as 58 percent of the respondents in the hydrocarbon sector have plans for investments for business expansion in Q2 2013, while 28 percent said they would not, with 14 percent being unsure.
Global growth is projected to increase to 3.3 percent during 2013, as the factors underlying soft global activity are expected to subside.
The US economy is set to grow by 1.9 percent in 2013, with 2014 chalking up a sturdier 3.0 percent, owing primarily to a relatively stronger trend in consumer and housing activity, strengthening job growth, improved household finances, pent-up demand and near-record housing affordability underpinning household spending gains.
Internationally, there appears to be greater resiliency to the myriad of economic and financial problems that have conspired to restrain growth over the past couple of years. Nevertheless, recurring euro zone debt strains highlighted by the recent surfacing of Cyprus' banking sector troubles, the continuing deleveraging of highly indebted household sectors in a number of advanced countries, ongoing structural adjustments to improve efficiencies in some emerging market economies, in addition to lingering geopolitical problems around the world, underscore the numerous headwinds that the global economy must still overcome to reach a path of sustained growth.
The BOI survey revealed that Saudi Arabia's hydrocarbon sector optimism has slipped in Q2 2013 as most parameters weighed.
The BOI for net profits has witnessed a fall of 21 points to 37 in Q2 2013 as compared to 58 in the previous quarter.
The index for the new employees parameter has descended to 40 in the second quarter from 47 in the preceding quarter.
The sector has an optimistic outlook regarding selling prices as the Level of Selling Prices parameter gained 10 points to reach 23 in Q2 2013 as compared to 13 in Q1.
The composite BOI for the non-hydrocarbon sector remained intact at 55 in Q2 2013. Most parameters in the sector witnessed marginal gains, with one parameter slipping and another remaining at the same level. The BOI for the Level of Selling Prices parameter has witnessed an increase of 2 points from 34 in Q1 2013 to 36 in the second quarter. Profitability expectations have improved with the BOI for net profits parameter gaining 1 point to stand at 56 in Q2 2013 from 55 in the preceding quarter.
Similarly the score for number of employees and level of stock parameters have gained 1 point each and stand at 54 and 34 respectively in Q2 2013.
The BOI for the volume of sales parameter remains high, unchanged from the previous quarter's level of 65. While the index for the new orders parameter has declined 4 points as compared to the previous quarter, yet new orders optimism remains high with a score of 62 in Q2 2013.
Three among the five business sectors in the non-hydrocarbon sector have witnessed an improvement in optimism levels; these include manufacturing, construction and business services.
The BOI score for the yransportation sector remained unchanged. However, trade and hospitality BOI recorded a sharp decline.
The construction sector continues to be the most optimistic among all the non-hydrocarbon sectors for Q2 2013.
The BOI for the trade and hospitality sector witnessed an 8 point decline to 49 in Q2 2013 from 57 in the preceding quarter making it the least optimistic sector.
Business enterprises in the Kingdom continuing hiring under the national plan will have to overcome the headwinds facing the global economy to reach a sustainable path, a top Saudi economist said yesterday.
Said Al-Shaikh, NCB senior vice president and group chief economist, made this observation at the launch of the second quarter survey on business optimism index (BOI) report conducted by the bank.
Referring to the second quarter survey made recently by NCB, Al-Shaikh said the survey covering the nonoil and gas sector showed that 56 percent plan to increase their headcounts in the second quarter, whereas 42 percent anticipate no change.
But the availability of skilled labor has been a matter of concern by 20 percent of the sector, while 13 percent have cited government regulations as a key challenge.
Some 8 percent anticipate low demand for products/services to be a chief concern for their business.
Answering a question about the impact of the foreign labor leaving the country on the Saudi economy in line with the current Saudization drive, he told Arab News: "This is not going to happen immediately as the labor directives require many of these workers to remain, but in line with the regulatory measure."
He clarified that skilled manpower shortage, especially in the oil sector, is a global phenomenon and not confined to Saudi Arabia alone.
Outlining the highlights of the survey, he said: "Composite BOI for the hydrocarbon sector declines marginally to 31 in Q2 2013 from 33 in the previous quarter; for the non-hydrocarbon sector it remains constant at 55 in Q2 2013."
He said: "Majority of the respondents in the non-hydrocarbon sector (51 percent) and hydrocarbon sector (48 percent) cite that there are no negative factors that will impact business in this quarter."
NCB, in association with Dun & Bradstreet South Asia Middle East Ltd. (D&B), released BOI survey for Saudi Arabia for Q2 2013.
The survey revealed a cautionary approach in the Saudi community.
It is apparent that the continued improvement in bank credit conditions along with strong government investment spending in physical and social infrastructure has made the construction sector the most optimistic among other sectors, as demonstrated by the rise in the construction BOI to 65 points.
"Moreover, reflecting this overall continued optimism, 58 percent of the oil and gas sector companies surveyed indicated they would invest in business expansion, while 51 percent of the companies in the nonoil and gas pointed out that they would invest in business expansion in Q2 2013," Al-Shaikh added.
He said there was no doubt that the continued accommodative monetary policy along with the prudent economic and fiscal management opted by the Kingdom had played a pivotal role in maintaining the high level of optimism of the business community in Saudi Arabia.
The survey for Q2 2013 was conducted in March 2013.
Talking about some actors impacting business, he said that in the non-hydrocarbon sector, 54 percent of the respondents had indicated that there are no negative factors affecting their business operations in Q2 2013.
Availability of skilled labor has been cited as a concern by 11 percent of the respondents, while 10 percent have indicated fluctuating demand for products/services to be the major challenges for their business.
Some 8 percent of the respondents have cited government regulations to be their chief concern, while 6 percent each have responded that competition and inflationary factors are the key challenges affecting their business. Only 4 percent of the businesses have highlighted availability of finance as a factor hampering business.
A majority (51 percent) of the companies in the non-hydrocarbon sector have said that they would invest in business expansions in Q2 2013, while 22 percent have said they would not. The remaining 27 percent are unsure about business expansion plans in Q2 2013. When compared to the previous quarter, the manufacturing sector continues to be the most optimistic with reference to business expansion plans.
Competition and inflationary factors each are the leading concerns for 5 percent sector respondents. As many as 58 percent of the respondents in the hydrocarbon sector have plans for investments for business expansion in Q2 2013, while 28 percent said they would not, with 14 percent being unsure.
Global growth is projected to increase to 3.3 percent during 2013, as the factors underlying soft global activity are expected to subside.
The US economy is set to grow by 1.9 percent in 2013, with 2014 chalking up a sturdier 3.0 percent, owing primarily to a relatively stronger trend in consumer and housing activity, strengthening job growth, improved household finances, pent-up demand and near-record housing affordability underpinning household spending gains.
Internationally, there appears to be greater resiliency to the myriad of economic and financial problems that have conspired to restrain growth over the past couple of years. Nevertheless, recurring euro zone debt strains highlighted by the recent surfacing of Cyprus' banking sector troubles, the continuing deleveraging of highly indebted household sectors in a number of advanced countries, ongoing structural adjustments to improve efficiencies in some emerging market economies, in addition to lingering geopolitical problems around the world, underscore the numerous headwinds that the global economy must still overcome to reach a path of sustained growth.
The BOI survey revealed that Saudi Arabia's hydrocarbon sector optimism has slipped in Q2 2013 as most parameters weighed.
The BOI for net profits has witnessed a fall of 21 points to 37 in Q2 2013 as compared to 58 in the previous quarter.
The index for the new employees parameter has descended to 40 in the second quarter from 47 in the preceding quarter.
The sector has an optimistic outlook regarding selling prices as the Level of Selling Prices parameter gained 10 points to reach 23 in Q2 2013 as compared to 13 in Q1.
The composite BOI for the non-hydrocarbon sector remained intact at 55 in Q2 2013. Most parameters in the sector witnessed marginal gains, with one parameter slipping and another remaining at the same level. The BOI for the Level of Selling Prices parameter has witnessed an increase of 2 points from 34 in Q1 2013 to 36 in the second quarter. Profitability expectations have improved with the BOI for net profits parameter gaining 1 point to stand at 56 in Q2 2013 from 55 in the preceding quarter.
Similarly the score for number of employees and level of stock parameters have gained 1 point each and stand at 54 and 34 respectively in Q2 2013.
The BOI for the volume of sales parameter remains high, unchanged from the previous quarter's level of 65. While the index for the new orders parameter has declined 4 points as compared to the previous quarter, yet new orders optimism remains high with a score of 62 in Q2 2013.
Three among the five business sectors in the non-hydrocarbon sector have witnessed an improvement in optimism levels; these include manufacturing, construction and business services.
The BOI score for the yransportation sector remained unchanged. However, trade and hospitality BOI recorded a sharp decline.
The construction sector continues to be the most optimistic among all the non-hydrocarbon sectors for Q2 2013.
The BOI for the trade and hospitality sector witnessed an 8 point decline to 49 in Q2 2013 from 57 in the preceding quarter making it the least optimistic sector.
© Arab News 2013
