Saudi Arabia Business Optimism Index – Q1 2013

Presented by Dun & Bradstreet South Asia Middle East Ltd. (D&B)National Commercial Bank (NCB)

Business Optimism Index

• The D&B Business Optimism Index is recognized the World over as an indicator which reflects the pulse of the business community

• Provides insight into the short-term outlook of business units on key business parameters including sales, profits, pricing, headcount and investment

• Provides analysis of major trends and issues concerning the business community

• Sample of business units representing Saudi Arabia’s economy is selected

• 500 business owners and senior executives across business units are surveyed

• The Q1 2013 survey was conducted during December 2012

Survey

• Respondents are questioned about their expectations on relevant business parameters

• Survey also captures respondent feedback on current business conditions

Survey

• The Composite Index is calculated separately for the hydrocarbon and non- hydrocarbon sectors

• To provide further analysis of the non-hydrocarbon sector, composite indices are calculated for each of the five economic subsectors

Composite Business Optimism Index

Real GDP Growth (%) Global composite manufacturing & services PMI

Source: JP Morgan and markit economicsSource: EIU

• Global growth to strengthen in 2013 from the previous year • Global composite PMI touches a nine-month high in December 2012

World Economic Outlook

• Mining & Quarrying sector growth estimated at about 6% in 2012 • Real GDP growth for 2012 recorded at 6.8%• All key sectors witnessed GDP growth in 2012.

Source: CDSI * Preliminary Source: CDSI

Economy of Saudi Arabia

Mining & Quarrying and Total GDP at Constant Prices (SAR mn)

GDP by Kind of Economic Activity at Constant Prices(SAR mn)

• Hydrocarbon sector optimism rises to 33 on strong profitability and hiring outlook• Strong sales, new orders and profitability outlook lifts non-hydrocarbon sector index

Non-hydrocarbon sectorHydrocarbon sector

Composite Business Optimism Indices

2009 2010201120122013

BOI Trends: Non-hydrocarbon Sector

Manufacturing Sector

• Global Manufacturing expands in December 2012 for the first time since May• Optimism levels in Saudi Arabia’s manufacturing sector jumps on strong sales and

new orders

Global Manufacturing Purchasing Managers’ Index

Source: JP Morgan and markit economics

• Global construction sector growth expected to be moderate in 2013• Saudi Arabia’s construction sector holds the most optimistic outlook among all sectors

for the sixth quarter in a row

Construction Sector

Trade & Hospitality Sector

• Global retail sector to face challenges in 2013 as global growth remains uncertain• Composite BOI for the sector rises on strong sales, new orders and profitability

outlook

Transport & Communications Sector

• Global transport sector growth remains subdued given slow recovery of the trade sector• Sector’s BOI moderates as most parameters slide

Finance, Real Estate & Business Services Sector

• Global Services PMI touches a eight month high in November, held steady in December 2012

• Optimism levels in the sector rise to 51 as most parameters improve

Global Services Purchasing Managers’ Index

Source: JP Morgan and markit economics

BOI Trends: Hydrocarbon Sector

• OPEC has forecasted that oil demand will grow at around 0.8 million bpd in 2013• The composite BOI improves on strong profitability and hiring outlook

OPEC monthly basket price (US$/barrel) Business Optimism Indices

• OPEC has forecasted that oil demand will grow at around 0.8 million bpd in 2013• The composite BOI improves on strong profitability and hiring outlook

Other Key Highlights

• 41 % Saudi businesses feel that there will be no negative factors impacting their business operations in Q1 2013

• Availability of skilled labor is the leading concern for both the hydrocarbon and non-hydrocarbon sector businesses

• 57% of companies in the non-hydrocarbon sector intend to invest in business expansion compared to 59% in Q4 2012

• Business optimism improves in the following non-hydrocarbon sectors: Manufacturing, Construction, Trade, Restaurants & Hotels and Finance, Insurance, Real Estate & Business Services

• All six parameters in the non-hydrocarbon sector evince an upward trend

• Hydrocarbon sector optimism improves with a rise in profitability expectations and improvement in the hiring outlook

Conclusion

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