(Bloomberg) -- Goldman Sachs Group Inc.’s top executive said he’s uncertain about mergers and acquisitions in the current period while expressing optimism about a pick-up in dealmaking over the long term.

“Long term, I’m certainly optimistic,” Chief Executive Officer David Solomon said at a panel discussion at the Future Investment Initiative summit in Riyadh, Saudi Arabia. “But I’m uncertain right now.”

Goldman suffered its eight straight quarterly profit drop after real estate writedowns and a continued dealmaking slump. In the bank’s earnings statement this month, Solomon said he expects a continued recovery in both capital markets and strategic activity if conditions remain conducive.

Dealmaking has hit a low after the US Federal Reserve started raising interest rates to combat inflation. Signs of a turnaround are starting to show, with two oil megadeals announced this month, but investment bankers have been eager to signal the business has reached a trough. Fees soared during the pandemic, fueled by low rates and government economic stimulus.

“If you’re a CEO and you’re uncertain, you tend to be cautious about doing significant things that change the trajectory of your business and bring outside factors into your business,” Solomon said during the panel discussion.

As businesses become more certain about the environment, they have to move forward and continue consolidation and scale to compete effectively, Solomon said. 

“My strong view is M&A activity, over reasonable periods of time, decades, grows in parallel with economic growth and market cap expansion,” he said. “We’ll continue on that journey and you’ll see a pick up in strategic M&A.”

The recent slump in M&A fees caused lenders to slash their workforce in the first few months of the year. But Solomon said his bank is still competitive when it comes to hiring talent.

“Goldman Sachs feels very good about where it sits competitively to attract people,” adding more than a million people applied for positions at his firm last year. The company employs about 45,000, he said.

--With assistance from Julia Fioretti.

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