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30 November 2023

High oil prices boost Saudi business confidence

By Nadim Kawach

The recent surge in crude prices has allied with signs of global economic recovery to improve the business mood in Saudi Arabia for the fourth quarter of this year, according to a poll obtained by Emirates Business.

The National Commercial Bank (NCB), the Gulf Kingdom's largest bank by assets, and Dun and Bradstreet South Asia Middle East, a leading global financial data and business information provider, carried out the Business Optimism Index (BOI) of Saudi Arabia, the latest in a quarterly series.

In a statement, NCB said nearly 500 local businessmen from various sectors took part in the poll which was conducted in October "in a scenario of growing optimism amid revival of the global economy on the back of increasing demand and curtailment of uncertainty in the financial markets."

The survey shows that in line with the pickup in global economic activity, the respondents from the non-hydrocarbon sector in Saudi Arabia have displayed a rise in expectations for sales volume and the selling prices.

These two factors are contributing to an improved outlook for profitability of Saudi businesses in the upcoming quarter, said the survey.

On the other hand, the survey added, surging oil prices over the past few weeks have enhanced the outlook of the kingdom's hydrocarbon sector on the back of which the business optimism regarding profitability has risen from the third quarter level of 38 to 48 in the fourth quarter.

"The fourth quarter's Business Optimism Index shows how the business sentiment in Saudi Arabia is influenced by the developments in the world economic outlook and the general atmosphere of the global markets," Said Al Shaikh, NCB's Senior Vice-President and Chief Economist, said. "While there are some sectors in the Saudi economy still concerned about the availability of finance and prices of raw materials, yet these concerns are relatively lower than the past quarters."

Al Shaikh said 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 despite 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," he said.

Phil Strange, Chief Financial Officer of Dun and Bradstreet South Asia Middle East, said the BOI study points towards further strengthening of the Saudi economy on the back of improved global outlook and steps by Saudi Government.


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