But study says business mood has been hurt by regional tensions
Saudi Arabia's economy, the largest in the Arab world, is expected to perform well again in 2012 although business mood for the first quarter has been hurt by Arab political turmoil and tensions between Iran and the West, the Gulf Kingdom's largest bank said on Tuesday.
National Commercial Bank (NCB) said its latest business optimism index (BOI) dropped for the first quarter, with the non-oil sector moderating to 54 from 60.
But it noted that this sector remains robust as the government's massive spending plans trickle down and stimulates consumer spending.
The hydrocarbon composite index has decreased, dropping by 23 points to 40, the report said, adding that global economic growth is expected to moderate this year, and as such, higher demand for oil is limited.
The study said it believes the Euro debt crisis would keep economies "reminded of the risks of a contagious effect that could complicate the global recovery."
In addition, Saudi Arabia's oil production levels are slowly declining as Libya increases its output levels following the transition of the new government. Similarly, the financial sector index also dropped to 55 from 64 as businesses forecasts moderation in credit opportunities, it said, noting that the sole sector to show growth was manufacturing with its index climbing to 55, gaining 6 points.
"The Saudi economy has shined through the financial crisis... however, the recent regional political turmoil, namely Iran, has caused unwanted uncertainties for businesses," the study said.
"The Saudi economy's resilience to external shock should calm businesses from global risks and 2012 will unfold as another good year for the economy."
© Emirates 24|7 2012
