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| Saudi construction sector GDP growth seen up 6.4% in 2010 – NCB |
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Posted on 24 Jul 2010 |
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Real GDP growth of Saudi Arabia’s construction sector is expected to expand 6.4% this year on the back of increased government investments, following a growth rate of 1.5% and 4.7% in 2008 and 2009 respectively, National Commercial Bank said in a special report.
The sector’s share in the kingdom’s non-oil GDP fell marginally in 2008, but it is forecast to reach an all-time high of 10.41% by the end of 2010, the report said.
Bank lending to the Saudi construction sector rose 7.8% in the first quarter this year, a clear sign that confidence in the sector is returning. Lending to the sector had dried up as banks felt overexposed after five years of heavy lending. Bank credit to the sector fell by 17.7% to SAR44.7 billion ($12 billion) in 2009 as the economic crisis brought with it declines in private investment, a shrinking of bank credit, and a number of project cancellations, the report said.
Demand for building materials, such as cement and steel, contracted in 2008 is in line with declining construction sector activity according to the report. There have also been declines in their prices, leading to the retendering of contracts. However, consumption of steel and cement is expected to rise by roughly 8.5% and 22% respectively in 2010, reaching 6.4 and 44.8 million tons, the report said.
The Kingdom has 687 current projects, 22% of which are in the execution phase, that are valued at approximately SAR2,606 billion.
According to NCB, contracts awarded in 2010 and 2011 are forecast to reach $64 billion and $86 billion, respectively.
Dow Jones Newswires
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