Leaders of Saudi Arabia’s small and medium-sized cross-border trading businesses are among the most optimistic in the world, according to the latest Trade Confidence Index by HSBC, SABB’s global banking partner.
Confidence in the expansion of worldwide trade is growing generally, the study of 17 key markets reveals. But it places the Middle East as the most confident region after the Far East and Saudi Arabia as the second most optimistic in the Arabian Peninsula.
Of 300 Saudi-based respondents to the survey, 71% said that they see the Kingdom’s foreign trade volume increasing in the second half of this year and that their fears about the world economy in general are receding.
Among further signs of optimism, 81% of respondents in Saudi Arabia – more than 3 out of 4 – see the financial health of their suppliers improving and fewer than one in three (31%) believe there is a risk of buyers defaulting on payment while almost half (48%) said that the risk of payment default was falling.
In addition, trust in Saudi banks is increasing as 52% stated that they were turning to banks to overcome the risk of non-payment from buyers.
But respondents were split on the potential impact of exchange rate fluctuations on the country’s import/export businesses. Half feel exchange rates are likely to have some adverse effects but 43% see exchange rates favouring – even strongly favouring – Saudi Arabia’s foreign trade.
The best prospects for trade growth in the rest of 2010, according to the Saudi business leaders, are in China and in the Middle East although they continue to eye the markets in North America and the rest of Asia.
Adel Al Nasser, Deputy Managing Director of SABB, commented: “Trade is playing a key role in the global economic recovery. The strengthening of confidence among these global respondents over the last year is proof of the significance of trade.
“Trade momentum is clearly shifting to the emerging markets, including the Middle East and Saudi Arabia where expanding trade, fuelled by intra-regional activity, continues to boost global economic recovery. However, developed economies, such as the US, that are capitalising on the opportunities in emerging markets are also set to benefit.”