Arab Today, arab today saudi firms to go on massive staff hiring drive amid upbeat economy
Last Updated : GMT 07:36:18
Arab Today, arab today
Arab Today, arab today

Saudi firms to go on massive staff hiring drive amid upbeat economy

Arab Today, arab today

Arab Today, arab today Saudi firms to go on massive staff hiring drive amid upbeat economy

Dubai - Arabstoday

Saudi companies plan to hire thousands of staff off the back of upbeat sentiment about the country\'s economy, a survey has revealed. The Banque Saudi Fransi report says that 82.4 per cent of executives surveyed expect to be hiring in the next six months, up sharply from 58.9 per cent in the second quarter of 2011. Companies are confident of being able to afford the cost of new staff, believing that bottom-line performance will rise over the next six months. \"It\'s the result of the economy doing well,\" explained John Sfakianakis, chief economist at Banque Saudi Fransi and an author of the report, \"Also it\'s at a time, during the summer, when you tend to get a lot of redundancies and people leaving their jobs and companies review their hiring policies.\" Almost 90 per cent of executives see the Saudi economy performing ‘much better\' over the next two quarters, and point to the likely revenue boost that Saudi Arabia will get from rising oil production. But while executives are upbeat about the economy generally, they are pessimistic about the performance of the Saudi stock market, with only 27.1 per cent anticipating positive performance. This contrasts with the 74.7 per cent who were bullish on Saudi shares in the first quarter. Executives are also concerned that growth in Saudi Arabia is largely driven by the government and that the private sector is not strong enough to spur growth on its own. \"Companies remain hesitant about the pace of Saudi Arabia\'s economic recovery since government spending has driven the revival rather than a genuine return in public sector GDP growth this year is 4.2 per cent — not high enough to stimulate job creation in the kingdom,\" the report says. Banque Saudi Fransi estimates that the Saudi economy will grow 5.5 per cent this year with the government posting twin fiscal and current account surpluses. Most of the growth will come from the oil and government sectors, while private sector expansion should remain below trend levels. They speculate that oil prices will make it easier for the government to finance a near 500 billion riyal, multi-year public investment programme unveiled by King Abdullah Bin Abdul Aziz earlier this year. The king aims to create jobs, build homes. raise wages and pay bonuses and unemployment benefits. Meanwhile, the possible inflationary effect of a one-off bonus paid out in the first half of the year to state and many private sector employees has not arisen, and inflation in May fell for a ninth month to 4.6 per cent, mostly due to reduced pressure on rents and lower food prices. The impact of a positive economic outlook and the payouts by King Abdullah have had an effect on prices. While in the second half of 2010, only 20 per cent of executives had considered raising prices, 43,2 per cent of company managers now say they will raise prices in the next six months, up from 37.8 per cent in the second quarter, while only 6.3 per cent said they planned to lower prices. At the same time, just a quarter of respondents said they would increase their stocks and inventories in the coming period, with 33 per cent saying that they would reduce them or keep them at current levels. Loan terms still tough Saudi Arabian banks will need to lend more money to the private sector if the country wants to fully recover from the financial crisis, a report has claimed. Banque Saudi Fransi\'s study says that even though interest rates are low and loan growth is improving, banks are still reluctant to extend loans to private companies, projects and households, choosing instead to to fund private-public companies and projects. It also reveals that less than 30 per cent of executives interviewed by the bank believe that the trend will change, with some 85.6 per cent of respondents  the highest in a year and a half  agreeing that banks had ‘substantially\' tightened requirements to approve loans to corporates and households in the past year. \"You have low interest rates and naturally you would expect that to create incentives to lend, but lending is not picking up very quickly. That is puzzling,\" said John Sfakianakis, chief economist at Banque Saudi Fransi and an author of the report, adding that demand for loans was likely not as high as in the past. \"There will be more money coming out, but I think it\'s going to be a gradual allocation, not immediate.\" As in many GCC countries, lending has struggled to expand in the past two years after screeching to a halt on the heels of the financial crisis. After years of double digit loan expansion, many banks were forced to take provisions against bad debt make it harder to borrow money.

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