25/04/2012 04:56 AST
The Saudi business sector remains "resilient" and would continue to enjoy "stability" in the second quarter of this year, the National Commercial Bank (NCB) said Tuesday at the launch of its Business Optimism Index for Q2 2012, in association with Dun and Bradstreet South Asia Middle East Ltd. (D&B).
The quarterly survey painted a rosy forecast for the Saudi business sector despite the prevailing geopolitical stalemate in the region and the eurozone debt crisis, among others.
Dr. Said Al-Shaikh, Senior Vice President and Group Chief Economist of the NCB, said three factors explained the exceptional condition of Saudi Arabia that sustains its robust economy. First, he said the government’s commitment to increase capital expenditure serves as a "buffer" to reduce the impact of the global economic weakness. Some SR270 billion worth of contracts were awarded by the government in 2011 both to the private and public sectors to further stimulate domestic growth, he noted.
Second, comparing the local versus the international financial status, the Kingdom has been enjoying huge surpluses, indicating that the government has enough reserves to fund the growth-generating projects, he said. The country has SR2.3 trillion foreign assets to date, he added.
Third, Al-Shaikh stressed the importance of "fading away" predisposition which reflects the attitude to lessen the impact of any negative events, where the initial "heightened fear" would eventually dissipate, discarding the pervading worries as the shock would eventually be absorbed. This situation has happened in the past and will be repeated again, he pointed out.
"Saudi government, undeterred by the financial difficulties faced by advanced economies, continued to span its capital expenditure, and in turn stimulating economic growth. Geopolitical tensions in the region, which have dominated the sentiment in the oil market, also brought with it higher Saudi production and prices and higher government oil revenues, as reflected by the second quarter BOI of the hydrocarbon sector.”
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