With its rich natural resources, Saudi Arabia is maintaining its progress in both the oil and non oil sectors.
“The kingdom is, in fact, aiming for a 10 per cent global share in petrochemicals,” Said Al Shaikh, senior vice president and group chief economist at the National Commercial Bank (NCB) said during the release of Saudi Arabia Business Optimism Index (BOI) for Q3, 2012 at the NCB headquarters in Jeddah. The kingdom’s petrochemical industry has become a strategic one with large exports and was emerging as the second largest after oil, he said.
The BOI survey for the quarter, which is the joint effort of the Dun & Bradstreet South Asia Middle East (D&B) and NCB, shows that despite aggravated global risks moderating the strength of optimism slightly, businesses in the kingdom remain resilient for Q3, 2012.
The composite BOI for the non-hydrocarbon sector stands at 37, compared to 52 points in Q2 2012; all non-hydrocarbon sectors reveal a drop in optimism levels because of expectations of slowdown in economic activity due to summer vacations and uncertain global conditions; and composite BOI for the hydrocarbon sector drops to 23 points with selling prices weighing high. The survey for the BOI for Q3, 2012 was conducted in July 2012, a time when the outlook for the global economy had become highly uncertain. After a gradual deceleration during 2011, especially in Q4, global growth had started to show some signs of dynamism in Q1 2012.
This was due to stronger growth in Asia, including Japan as well as South America and a modest but sustained growth in the US. In Europe, investor sentiment was calmed by the Greek debt swap as well as the 1 trillion-euro worth of long-term refinancing operations provided by the European Central Bank. However, this momentum seems to be fading and the global economy now faces significant challenges in the near term, with an expectation to grow by 3.5 per cent this year compared to 3.9 per cent in 2011, as per IMF estimates. Al Shaikh said: “As the signs of dynamism in global economic growth seems to be fading away, 30 per cent of the firms surveyed in the kingdom indicated that the business environment due to the global economy will impact their business operations in Q3.”