Saudi construction sector to shrink by 0.7pc
Riyadh, April 7, 2009
The construction industry in Saudi Arabia is poised to shrink by 0.7 per cent, down to SR72.57 billion ($19.38 billion) this year mainly due to the global slowdown, said a report.
Last year the real industry value contracted by 0.2 per cent year on year putting an end to positive growth, the Arabian Business reported, citing a Business Monitor International (BMI) data.
Positive growth would not return until 2013 thanks to the crisis, the report said. High inflation in Saudi Arabia forecast to hit eight percent this year, was an exacerbating problem, the report added.
“In fact, we do not see positive growth returning until 2013, when it will expand at a rate of 3.7 per cent year-on-year. The global slowdown has impacted the construction sector in all the Gulf Cooperation Council (GCC) states, and Saudi Arabia will not be immune,” it said.
Although there will continue to be activity in the industry, and the nominal value will increase year-on-year, this will be negated by inflation, pushing growth rates negative, the report stated.
However, there were some positive indictors too, with construction drying up in other parts of the GCC, most importantly Dubai, a number of developers had set their sights on Saudi as the country to support them, BMI pointed out.
Increased government spending to help cushion the country from the global economic downturn, and declining oil revenues, would go to boost most infrastructure and construction industries, the report added.