CIC - Construction Intelligence Center

Saudi Arabia's Slow Recovery

  • Published:Tuesday, December 19, 2017


Construction activity in Saudi Arabia remains sluggish, with only a marginal pick-up expected in 2018 following two years of contraction.

 

The recovery will gain momentum in the following years, assuming that oil prices edge up and that political risks in the region do not greatly disrupt investment flows.

 

Construction output is estimated to have fallen by 2% in real terms in 2017, an outturn that reflects a reduction in government spending, the continued low price levels for oil, ongoing headwinds in the private construction market, and a slowdown in broader economic activity in the country. In the first quarter of 2017, construction output (as measured by gross value added) had dropped by 3.2% year on year.

 

Although the government plans to prioritise some projects and scale down others, and oil prices are likely to recover somewhat over the course of 2018, this is unlikely to provide much upward relief to the sector as the fundamental picture remains bleak and market headwinds persist. Accordingly we forecast real growth of just 1% in 2018.

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