Ontario Construction News staff writer
While Canada’s construction economy has contracted because of COVID-19, the story is also challenging in other nations, notably Saudi Arabia, which has shown a sharp decline in output.
Saudi Arabia’s construction sector shrank by 4.7% in the second quarter of 2020. 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%.
“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, GlobalData forecasts that Saudi Arabia’s construction industry will contract by 2.8% in 2020,” said economist Yasmine Ghozzi.
“The Kingdom’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. 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.”
“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,” Ghozzi, said. “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.”