Saudi Arabia’s construction industry suffered a sharp quarterly slide and is expected to contract by 2.8 per cent this year, said a report.
This is in line with expectations of a severe decline in construction output in Saudi Arabia in Q2 2020 amid plunging oil prices and the Covid-19 pandemic, according to GlobalData, a leading data and analytics company.
Saudi government’s swift introduction of integrated stimulus and support measures to struggling industries such as construction, locking down sectors of the economy, and cuts and delays in capital spending have put a strain on the kingdom’s budget, it stated.
Removal of cost of living allowance and tripling the value-added tax (VAT) rate to 15% were stringent policies the kingdom had to push for, it added.
"Saudi Arabia’s construction sector shrank by 4.7% in Q2 2020," revealed Yasmine Ghozzi, Economist at GlobalData.
"The kingdom’s GDP contracted by 7% in real terms in Q2 2020. This negative growth originated mainly from the contraction in the non-oil sector by 8.2%, and the oil sector by 5.3%," she stated while offering her view on the outlook for the construction sector.
Ghozzi pointed out although recovery will be slow as the kingdom copes with the aftershocks of oil market collapse and the global pandemic, the outlook remains promising on the back of Vision 2030.
The future growth of the kingdom is bound with private investment so realizing income diversification and weaning the economy off its oil dependency is deemed essential in building a sustainable economy, he added.-TradeArabia News Service