Saudi construction sector to shrink 3% by 2016-end: NCB

Saudi Arabia’s construction sector is expected to contract by 3 percent to SAR 156 billion by the end of this year amid declining oil prices and lower government spending, National Commercial Bank (NCB) said in its monthly economic review.

“As non-oil GDP is expected to stagnate in 2016, the construction sector’s share of non-oil GDP is expected to decline to 8.7 percent in 2016 from 9.0 percent in 2015,” NCB added.

The construction sector contracted 1.9 percent in real terms during the first quarter, to SAR 31.4 billion. However, the substantial investments in the sector over the past five years, amounting to over SAR 1 trillion “underpinned the construction sector and limited the contraction in the sector.”

Construction awards totaled SAR 20.3 billion by the end of Q2-2016, registering a drop of 27 percent year-on-year (YoY).

Meanwhile, NCB added that total expenditure in the sector fell by 20.1 percent YoY to SAR 145.6 billion in Q1-2016.