association index of applications for home purchase suggests that demand has been fairly steady through early april. also, mortgage rates are still at historically low levels, and mortgages to prime borrowers and fixed - rate mortgages to all classes of borrowers continue to show low rates of delinquency. the second major area of concern in the near - term outlook, and one that perhaps could pose noticeable downside risks, is business investment. real outlays for new equipment and software weakened in the final quarter of 2006, and the recent data on orders and shipments of nondefense capital goods suggest that the softness in demand has extended into early this year. part of the weakness can be clearly traced to a decline in demand for investment goods that are used heavily in residential construction. in addition, demand for goods used by the motor vehicle industry also has softened of late. but, demand for other types of non - high - tech business equipment also appears to have slowed recently, raising more fundamental questions about business views on the current and prospective environment for capital spending. to be sure, the pace of output has moderated, which typically would lead to some deceleration in capital spending. but the magnitude of the recent pullback seems to be greater than would be expected. adding to the puzzle has been a weakening in demand for non - high - tech equipment even as financial conditions for investment have remained generally favorable. in particular, business balance sheets are strong, and although profits have slowed, profit margins remain elevated. interest rates and credit spreads are relatively low, and firms appear to have ample ability to raise funds at a reasonable cost. the unwillingness of businesses to invest might be due to concerns about the prospects for long - term productivity growth and the expected rate of return on capital investment. moreover, businesses may be anticipating a more pronounced deceleration in sales than would be consistent with the moderate expansion that i am expecting. respondents to the blue chip economic indicators survey suggest that the recent reluctance to invest reflects greater uncertainty about the outlook for sales and earnings. if so, the continuation of a moderate economic expansion is likely over time to restore confidence and lead to a firming in business investment. not all of the recent news on business spending has been to the downside, however. demand for high - tech equipment appears to have picked up early this year after leveling off in the final quarter of 2006. demand for computers, which was likely boosted by the introduction of the windows vista operating system, seems to

robust fundamentals of the saudi economy have prepared an appropriate environment for banks to adapt to successive, regional and international changes during the previous period. banks operating in the kingdom have been able to overcome the crises that hit other economies, and have been able to benefit from banks ’ experiences and modern banking technology. this is reflected in the diversity of banking services and products offered in the kingdom and their highly advanced level. currently, 15 banks are operating in the kingdom with a network of 1, 251 branches at the end of the first quarter of 2006, including the branches of gulf and foreign banks such as the gulf international bank, the emirates bank, bnp paribas and deutsche bank which was opened last week. in addition, licenses were granted to several gulf and foreign banks to open branches in the kingdom. also, the establishment of a saudi bank with a paid - up capital of rls 15 billion has been approved. preparations are currently underway on finalizing the procedures of its establishment under the name of “ bank alenma ”. on this occasion, i congratulate the nbk on the commencement of its operation in the kingdom, and i wish the bank and its staff good luck and success.