Oil sector less optimistic with 55% indicating no plans to invest further

Forty four percent of businesses in Saudi Arabia are not aware of the national vision of the economic transformation 2020, National Commercial Bank (NCB) said in its “Saudi Arabia Business Optimism Index (BOI)” survey for the third quarter of this year.

The survey is issued by NCB in collaboration with Dub & Brandstreer South Asia and Middle East.

The index showed a “bearish outlook” for the hydrocarbon sector as it dropped to -2 points in the third of the year 2016. This drop in the oil and gas sector goes in line with earlier expectations of a drop in the GDP by 13.4.

The increase in government fees and the lift of subsidiary will help grow the economy in the medium and the long run, noted Said A. Al-Shaikh, the Head of Research, Group Chief Economist at the NCB in a press conference Tuesday at the bank’s headquarters. He noted that the new added fees on expatriates is to decrease the gap between the employment of Saudis and non-Saudis and it will give a chance for more Saudis to join the job market.

According to Al-Shaikh, the survey revealed that the challenges which different sectors face are the government regulations and the oil prices.

They survey also showed that 55% of the oil sector companies have no plans to expand their investments, with 31% of the non-oil sector are planning to develop their investments particularity the real estate and transportation sectors.

Forty five percent of the non-oil sector stated that they see that the increase in water and electricity prices did not affect their businesses.
The net profit and the employment rate in the construction sector noted the figures is low due to the delay in projects and reduction of new projects, which led to low optimism rate that drove only 26% to opt for more investments in this sector. The small and medium businesses were more optimistic, the survey noted.