By Andy Sambidge
Business optimism index in kingdom sees increase in confidence on sales volumes.
The Saudi business community is looking to the fourth quarter of 2009 with more optimism, according to a new survey.
The latest Saudi Arabia Business Optimism Index (BOI) revealed that more company chiefs in the kingdom are confident of remaining profitable in Q4, compared to the previous quarter.
The index, produced by the National Commercial Bank and financial data firm Dun and Bradstreet, was conducted in October in a scenario of growing optimism amid the first signs of a revival in the global economy.
The BOI survey showed that in line with the pickup in global economic activity, the respondents from the non hydrocarbon sector in Saudi Arabia are expecting a rise in sales volume and the selling prices in Q4.
These two factors are contributing to an improved outlook for profitability of Saudi businesses in the upcoming quarter, the survey said.
Surging oil prices have enhanced the outlook of the hydrocarbon sector in the kingdom, the survy added, with business optimism regarding profitability rising from the Q3 level of 38 to 48 in Q4.
Dr Said Al-Shaikh, senior vice president and chief economist of the National Commercial Bank said: "There are increasing signs suggesting a gradual recovery in the global economy...While there are some sectors in the Saudi economy still concerned about the availability of finance and prices of raw materials, these concerns are relatively lower than the past quarters."
Al-Shaikh added: "The financial results of the third quarter recently released by the Saudi companies reaffirmed, as a whole, the continued growth and stability in the Saudi economy, notwithstanding, the financial turmoil that a few businesses faced and the provisions made by Saudi banks in response.
"There is no doubt that the continued support provided by the Saudi Arabian Monetary Agency to the banking sector along with the expansionary fiscal policy opted by the Kingdom both have played a pivotal role in raising the level of optimism of the business community in Saudi Arabia."
The Q4 report also revealed that raw material cost was the top concern raised with 51 percent of respondents citing this as a major factor impacting their business.
The manufacturing sector, followed by the trade sector was most concerned about increase in raw material costs, while availability of skilled labour was the top concern for transport and communications firms.
In the oil & gas segment, project delays was the chief factor impacting business, while transport and development and discovery costs were also important issues.