Business optimism in Saudi Arabia’s hydrocarbon sector has touched an all-time low in the first quarter of 2016 as oil prices remain depressed.
The D&B Business Optimism Index (BOI) survey revealed that indices for selling prices and net profits remained in negative territory during Q1.
The non-hydrocarbon sector composite BOI also retreated on a quarterly and annual basis to 28 in Q1 as most parameters weighed.
The transport segment was the most optimistic (37), while the manufacturing sector was the weakest (22) in the first quarter of 2016.
The composite BOI for the finance, real estate and business services sector stood at 28 in Q1, down marginally from 32 in Q4 2015 while the construction sector’s BOI moderated to 26 from 31 with a lack of projects, slowdown in market conditions and uncertain economic conditions impacting the sector.
In a reversal of last quarter’s trend, SMEs are more optimistic than large companies in Q1, with their respective composite scores of 31 and 24.
Competition and the impact of low oil prices continued to be the topmost concern for firms in Saudi Arabia, according to a statement.
However, despite lower optimism levels, both hydrocarbon and non-hydrocarbon sector firms said they are optimistic about investment in business expansions.
Commenting on the findings, Assad Shaikh, associate director – Research & Advisory Services, Dun and Bradstreet South Asia Middle East Ltd, said: “Sentiments in the region remain subdued as firms in Saudi Arabia witnessed lower optimism levels.
“In line with the cautious outlook, the optimism with reference to the business environment has also weakened as 35% of the hydrocarbon sector firms have indicated that they do not expect any factors to impact their operations; the proportion stood at 52% for the non-hydrocarbon sector.
“Despite the lower composite scores, Saudi Arabia’s businesses are modestly more optimistic with regard to investment in business expansion in Q1.”Â
*This article first appeared on ArabianBusiness.com
