Upload
neal-kennedy
View
249
Download
0
Tags:
Embed Size (px)
Citation preview
Saudi Arabia Business Optimism Index – Q2 2010
Presented by Presented by Dun & Bradstreet South Asia Middle East Ltd. (D&B)Dun & Bradstreet South Asia Middle East Ltd. (D&B)National Commercial Bank (NCB)National Commercial Bank (NCB)
• The D&B Business Optimism Index is recognized world over
as an indicator which ascertains the pulse of the business
community
• Provides insight into the short-term outlook of the business
units on sales, profit growth, investment etc
• Provides analysis of major trends, outlook and issues
concerning the business units
Business Optimism Index
Survey
• Sample of business units representing Saudi Arabia’s economy was
selected
• 500 business owners and senior executives across different industry
sectors were surveyed
• Survey conducted during March 2010 for the 2nd quarter of 2010
• Respondents are asked questions about their expectations on relevant
business parameters
• Survey also captures respondent feedback on current business
conditions
Composite Business Index
• The Composite Business Index is calculated separately for the hydrocarbon and non hydrocarbon sector
• For the non hydrocarbon sector, the Composite Index captures the weighted aggregate behavior of five individual indices
• For the hydrocarbon sector, the Index takes into account the weighted aggregate behavior of three individual indices
40.3
37.4
40.1
43.2 44.0
48.1 48.2
52.053.2
54.2
51.753.1 53.2 53.6
56.757.7
30.0
35.0
40.0
45.0
50.0
55.0
60.0
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
2008 2009 2010 2011
World Advanced Economies
Emerging and developing economies Middle East
World Economic Outlook
Real GDP Growth Global composite manufacturing & services PMI
Source: JP Morgan and markit economics
•Global economy expected to grow 4.2% in 2010, emerging economies to expand 6.0%•US economy registered 5.6% growth in Q4 2009, fastest since third quarter of 2003•Global composite PMI indicates continued expansion of manufacturing and services industry activity world over; April reading at 34-month high
Source: IMF
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
2006 2007 2008 2009
Fiscal balance as % of GDP Trade balance as % of GDP
Current account balance as % of GDP
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
2006 2007 2008 2009
Growth in Real-GDP (%) Growth in Private Sector (%)
Growth in Govt Sector (%) Growth in Oil Sector (%)
Economy of Saudi Arabia
•Saudi Arabia’s growth for 2010 is projected at 3.7%; led by government spending and higher oil production
•The Saudi government has announced its biggest ever budget for year 2010, with planned expenditure of SAR 540 bn, up 13.7% from 2009
Source: Ministry of Planning Source: Ministry of Planning
Sector-wise GDP growth Fiscal & Trade balance
Composite Business Optimism Indices
•Non hydrocarbon sector outlook stabilizes at last quarter’s level
•Weak selling price outlook drags the hydrocarbon sector optimism lower
46
-21
30
41
21
-10
0
10
20
30
40
50
Q109 Q209 Q309 Q409 Q110 Q210
Hydrocarbon sector
30
8
3541
62 61
0
10
20
30
40
50
60
70
Q109 Q209 Q309 Q409 Q110 Q210
Non-hydrocarbon sector
Business Optimism Indices Trends : Non Hydrocarbon Sector
38
18
5552
76
69
0
10
20
30
40
50
60
70
80
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10B
OI I
ndex
New Orders
38
12
4954
73 72
0
10
20
30
40
50
60
70
80
Q1 09 Q2 09 Q309 Q409 Q110 Q210
BO
I In
dex
Volume of Sales
0
-18
-119
33
42
-30
-20
-10
0
10
20
30
40
50
Q1 09 Q2 09 Q309 Q409 Q110 Q210
BO
I In
dex
Selling Prices
36
12
42
51
75 74
0
10
20
30
40
50
60
70
80
Q1 09 Q2 09 Q309 Q409 Q110 Q210
BO
I In
dex
Net Profits
40
17
30 29
54
47
0
10
20
30
40
50
60
Q1 09 Q2 09 Q309 Q409 Q110 Q210
BO
I In
dex
Number of Employees
12 10
2227
62
53
0
10
20
30
40
50
60
70
Q1 09 Q2 09 Q309 Q409 Q110 Q210
BO
I In
dex
Level of Stock
35.8
37.3
41.845.3
47.050.0
53.1
53.0
54.4
53.7
54.6
56.1
55.4 56.757.8
30.0
35.0
40.0
45.0
50.0
55.0
60.0
Feb
-09
Mar-
09
Apr-
09
May
-09
Jun
-09
Jul-
09
Aug
-09
Sep
-09
Oct
-09
Nov
-09
Dec-0
9
Jan
-10
Feb
-10
Mar-
10
Apr-
10
BOI - Manufacturing Sector
61 63 59
16 13
68 67
43
13
74 7464
79
6068 69
41
75
5969
-26
19
6960
-40-30-20-10
0102030405060708090
Volume ofSales
New Orders Level ofSellingPrices
Net Profits Number ofEmployees
Level ofStock
Inde
x
Q3 2009 Q4 2009 Q1 2010 Q2 2010
Manufacturing Sector
•The global manufacturing sector continued to expand in April for the tenth consecutive month, indicating sustained recovery in the sector
•Saudi manufacturing sector optimism mostly stable as compared to the previous quarter
•Raw material costs continues to be a leading cause of concern for the sector
Global Manufacturing Purchasing Managers’ Index
Source: JP Morgan and markit economics
GDP 12.1%
Construction Sector
• Global construction sector currently driven by infrastructure spending as
commercial property undergoes correction
• Saudi’s construction sector optimism mixed as optimism for sales volume stays
intact (q-o-q) but that for new order sees a slight dip
• Selling prices expected to rise amid high commodity prices in the international
markets
BOI - Construction Sector
44 43
10
49
29
48 4436 36
23
77 79
60
43
79
65 6372
47 43
66
76
18
0102030405060708090
Volume ofSales
New Orders Level ofSellingPrices
Net Profits Number ofEmployees
Level ofStock
Ind
ex
Q3 2009 Q4 2009 Q1 2010 Q2 2010 6.9%
GDP
Trade & hospitality Sector
• Global trade sector showing early signs of demand revival
• Saudi’s trade & hospitality sector registers a drop in demand outlook
for Q2 as sales volume and new orders optimism declines substantially
8.3%
GDP
Transport & Communications Sector
• World trade volumes are expected to grow at 9.5% in 2010, after suffering
a sharp drop of 12.2% during 2009
• Saudi transport & communications sector optimism broadly stable at last
quarter’s level
BOI - Transport & communications sector
39 3943
59 59
35
74 75
49
7669
29
77
30
60
11
59
1722
74
0
10
20
30
40
50
60
70
80
90
Volume ofSales
New Orders Level ofSelling Prices
Net Profits Number ofEmployees
Ind
ex
Q3 2009 Q4 2009 Q1 2010 Q2 2010
6.6%
GDP
38.641.5
43.7
43.2
47.4
46.5
50.5
52.6
53.0
50.3
51.8
51.2
52.7
56.0 56.8
30.0
35.0
40.0
45.0
50.0
55.0
60.0
Feb
-09
Ma
r-0
9
Ap
r-0
9
Ma
y-0
9
Jun
-09
Jul-
09
Au
g-0
9
Se
p-0
9
Oct
-09
No
v-0
9
De
c-0
9
Jan
-10
Feb
-10
Ma
r-1
0
Ap
r-1
0
BOI - Finance, insurance & real estate sector
3745
33 33
45 46
15
44
34
6873
32
68
58
80 81
34
77
48
10
0
10
20
30
40
50
60
70
80
90
Volume ofSales
New Orders Level ofSelling Prices
Net Profits Number ofEmployees
Inde
x
Q3 2009 Q4 2009 Q1 2009 Q2 2010
Finance, Insurance, Real Estate & Business Services Sector
• The global service sector is exhibiting renewed strength. At 56.8 in April, the
reading is at a 33-month high
• Saudi service sector also showing similar trend with continuous improvement
in demand outlook and consequently profitability expectations
GDP
12.5%
Global Services Purchasing Managers’ Index
Source: JP Morgan and markit economics
38.641.5 41.4
45.850.2
55.8
69.664.6
71.467.2
72.776.3 74.0 76.0
73.077.2
82.3
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
-23
38
10
38
48
-3
45 48
27
18 18
30
-30
-20
-10
0
10
20
30
40
50
60
Level of Selling Prices Net Profits Number of Employees
Hydrocarbon sector
Q3 2009 Q4 2009 Q1 2010 Q2 2010
Business Optimism Indices Trends : Hydrocarbon Sector
• Oil prices have stayed consistently above USD 70 per barrel mark for the last seven consecutive months
• A majority, 72% of the respondents expect prices to remain unchanged in Q2
GDP26.9%
OPEC Monthly Price Basket
• Manufacturing sector continues to face pressure due to rising cost of raw materials
• 43% of the respondents in the non hydrocarbon sector are expecting borrowing conditions to improve in the second quarter
• Nearly half of the non-hydrocarbon firms plan to invest in business expansion
• Project delays cited as the key factor that might impact business units in the hydrocarbon sector
Other Key Highlights
Conclusion
• Business outlook in Saudi Arabia broadly stable for the non hydrocarbon sector
• The BOI for selling price parameter continues to rise for the fourth consecutive quarter
• Despite turbulence witnessed in the international financial markets during the last quarter, optimism level in finance & business services sector has improved
• Hydrocarbon sector optimism suffers due to weak selling price outlook
THANK YOU THANK YOU