Saudi economy forecast to grow 4% in 2010

saudi-Business-Optimism-Index-forumRIYADH: Saudi economy is poised to grow by 4% in 2010, while it is projected to register real GDP contraction of 0.9% in 2009, according to a survey released here on Tuesday.

“Non-oil GDP growth is projected at 3.3 percent this year and is expected to improve marginally to 4.2 percent in 2010,” said Said Al-Shaikh, senior vice president and chief economist of the National Commercial Bank (NCB). He was speaking here after the presentation of “Saudi Arabia Business Optimism Index” (BOI) for the fourth quarter 2009. The BOI was released by NCB in association with Dun & Bradstreet South Asia Middle East Ltd. (D&B), a financial data and business information provider.

The BOI survey for Q4 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. On the other hand, surging oil prices have enhanced the outlook of the hydrocarbon sector on the back of which the business optimism regarding profitability has gone up from the Q3 level of 38 to 48 in Q4.

Commenting on the findings of the survey, Said Al-Shaikh, senior vice president and chief economist of the NCB, said, “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 international markets.