Executives were upbeat about Saudi Arabia's long-term economic prospects, although they also acknowledged the severity of the current challenging global conditions, the 2019 edition of the Business Barometer: KSA CEO Survey carried out by Oxford Business Group (OBG) revealed. As part of its survey on the economy, the global research and consultancy firm asked more than 100 C-suite executives from across Saudi Arabia's industries a wide-ranging series of questions on a face-to-face basis aimed at gauging business sentiment. More than four-fifths (82%) of business leaders interviewed said they were confident that the Kingdom would successfully achieve the targets laid out in Vision 2030, KSA's long-term plan to diversify the economy and reduce its dependence on oil. Manufacturing was identified by interviewees as the sector most likely to drive non-oil growth in the short to medium term, chosen by 15% of respondents, closely followed by tourism (12%). Executives were also largely upbeat about the country's near-term economic prospects, with 64% describing their expectations for local business conditions over the coming 12 months as either positive or very positive. Significantly, just over one year on from the introduction of value-added tax in KSA, most interviewees reacted favorably when asked for their opinion on the country's personal and business tax environments. Four-fifths of business leaders surveyed said they thought the tax climate was competitive or very competitive on a global scale, with less than 10% describing it as uncompetitive or very uncompetitive. However, respondents were also keenly aware of the impact that external factors could have on the country's economic plans, especially challenges close to home. Almost two-thirds (65%) of business leaders surveyed identified regional political volatility as the top event they felt was likely to weigh on the local economy, with slowing demand growth in China and multiple Fed rate hikes chosen by 13% and 7% of interviewees respectively. Commenting in his blog, Billy Fitzherbert, OBG's Regional Editor for the Middle East, said while 2018 was a disappointing year for emerging economies, news that the latest budget represented Saudi Arabia's biggest ever and earmarked SR200bn ($53.3bn) for the Private Sector Stimulus Plan over the medium term reaffirmed the government's commitment to forging ahead with its diversification drive. "Saudi Arabia will be included in the MSCI Emerging Markets Index for the first time in June 2019," he said. "While the index's drop of 14.6% in 2018 was indicative of the year, it should also be noted that the fall came on the back of 37.3% growth in 2017 to reach a 15-year high. Indeed, 2018 was disappointing, but for understandable reasons, and there is optimism that the fortunes of emerging markets will fare better in 2019." Fitzherbert added that reforms, coupled with Saudi Arabia's changing demographics, are helping to reenergize the country and the business community in particular. "One thing that comes up again and again in our meetings with local businesspeople is the sense of renewed dynamism within the Kingdom, spurred by a large demographic of highly educated young nationals – 70% of the population in Saudi Arabia is under the age of 30. These young people are being reflected at the management level, too," he said. "There is no denying that the winds of change that swept through Saudi Arabia in 2016 are still blowing strong." — SG
