Saudi Arabia Infrastructure Report Q2 2013 - New Report Available

New Construction research report from Business Monitor International is now available from Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 15 March 2013

BMI Industry View

BMI View: Fuelled by a flurry of contract awards in 2012, we expect to see a buoyant 2013. Whilst the sheer size of the Saudi construction industry will force the growth to moderate in the longer term - due to base effects - we nevertheless highlight the opportunities within the wider construction sector. Funding - largely unhampered by any financial woes - is unlikely to run dry, nor lose support, as the government's vast infrastructure investment scheme aims to both diversify away from oil, keep protests at bay and stave off public discontent. In an economy where the government is largely responsible for the generation of the state's total GDP, any budget delay will cause a significant negative chain-reaction, resulting in nonpayment to contractors.

View Full Report Details and Table of Contents (http://www.fastmr.com/prod/541274_saudi_arabia_infrastructure_report_q2_2013.aspx?afid=201) (http://www.fastmr.com/prod/541274_saudi_arabia_infrastructure_report_q2_2013.aspx?afid=201)

We forecast a robust 7.5% real industry growth for 2013. This reflects the significant number of contracts awarded both in 2011 (140% year-on-year (y-o-y) increase), and in H212 (50% increase y-o-y), as well as increased government spending, which was pledged in response to popular discontent and the Arab Spring. Over the medium term, we forecast healthy annual average growth of 5.9% between 2013 and 2017.

Factors Underpinning Growth:

- Transport Upgrade: The transport sector is receiving preferential treatment, especially rail infrastructure, with projects worth US$24bn under way or in the pipeline. To support this flurry of transport contracts and to ease layers of red tape, the government set up a Public Transport Commission in October 2012.
- Strong Chemical Integration: A growing number of petrochemicals projects are also boosting construction activity, as the country attempts to diversify its industrial sector away from oil and gas. In fact, we are seeing a rapid expansion of downstream capacity to meet the growing economic needs of the region, with operators rushing to capture an increasing slice of the market.
- Electricity Revamp: Another dynamic sub-sector in Saudi Arabia continues to be power plants and transmission and distribution (T&D). The US$80bn (excluding nuclear), 10-year investment plan for electricity infrastructure (2008-2018) has led to significant activity in the energy sector.
- Generous Social Spending: Huge investment into the social infrastructure sector is likewise in the pipeline, in part to appease the populace. Both the SAR1.44trn (US$385bn) Ninth Development Plan (2010-2014), and social benefit packages worth a total of US$130bn - the latter announced in response to the protests which swept the region during 2011 - are heavy on social infrastructure spending.
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