Saudi SMEs 'most confident globally'

23/01/2011 00:00 AST

Saudi Arabia is the global leader in terms of small and medium enterprises (SMEs) business confidence, while Middle East respondents reported highest levels of confidence in a global survey.

Saudi Arabia's SMEs are the most confident about the growth prospects of the Saudi economy, according to the survey findings of the survey conducted by HSBC.

The survey involved more than 6,389 enterprises in 21 key markets globally.

Through the Global Small Business Confidence Monitor, HSBC gauges the outlook of small businesses on local economic growth, capital investment plans and recruitment.

In the study, respondents in Saudi Arabia have clearly expressed their intent to invest and expand their workforce in the next six months in light of the expected positive economic climate.

On the other hand, the findings show that confidence in future business growth among SMEs within emerging markets continues to increase, while levels in developed markets have dropped, according to HSBC's bi-annual Small Business Confidence Monitor.

The biggest positive shift in business confidence on a regional level came from the Middle East and North Africa region (Mena) and on a country level came from Saudi Arabia.

With 59 per cent of Mena SMEs expecting their local economy to increase at a greater pace in the six months, confidence remains strong and continues grow within the region, the survey said.

The rise in oil prices has contributed to the increase in business confidence in the Middle East, with increases in wealth set to support private consumption and domestic demand.

A recent HSBC Middle East Gulf Business Confidence Index showed that 36 per cent of respondents saw increasing oil prices positively impacting their business.

Research findings show the number of SMEs across the globe conducting international business activities is expected to expand from 29 per cent to 40 per cent by 2013. The increase is driven by domestic SMEs, 18 per cent of which plan to become international by 2013.

International SMEs are demonstrating aggressive cross-border expansion plans with almost half (48 per cent) intending to expand their international operations in the next two years to increase revenue.

The decline in confidence within the developed markets brought the overall global index down, while emerging markets indicated sustained growth and continued to hold a positive local economic outlook with almost half (43 per cent) forecasting an increase in the growth of their local economy over the next six months.

In the developed markets only 12 percent predicted an increase in local economic growth over the next six months, whilst 26 per cent predicted a decrease. Increases in recruitment and capital expenditure remains largely stable globally with 33 per cent of emerging market SMEs planning to increase their staffing vs 17 per cent in developing markets and 48 per cent planning to inject more into investments over the next six months vs 27 per cent developing markets.

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