A joint Saudi-US report expected smooth flow of giant projects in Saudi Arabia, despite the challenges imposed by the coronavirus outbreak and the implications of falling oil prices in global markets.
According to the report, published by the US-Saudi Arabian Business Council (USSABC) and a copy of which was obtained by Asharq Al-Awsat, the volume of construction contracts awarded in the past year amounted to 197.1 billion riyals ($ 52 billion).
More so, the Red Sea Development Company is bent on raising the value of the contracts it is awarding to more than double in 2020, from 2.3 billion riyals ($ 613 million) in 2019 to 6.8 billion riyals ($ 1.8 billion) in 2020.
The report also added that the Qiddiya Investment Company recently disclosed plans to accelerate its activities to meet the big opening date scheduled in 2023. This comes with spending estimated at about 19 billion riyals ($ 5 billion). The initial statement of the 2020 budget expected the doubling of spending in 2020 compared to 2019.
The construction sector’s contribution to GDP is another sign of the sector’s revival. In real terms, the construction sector grew by 1.28 percent quarter-on-quarter in the second quarter and by an impressive 4.4 percent year-on-year. As the awarded contracts enter the implementation phase coupled with the Ministry of Finance’s expectation that mega projects will double in 2020, the construction sector will return to being a significant contributor to the Kingdom’s economy.
Despite the major challenges, the USSABC index showed that contract awards were ready to continue moving above the 200-point threshold during the year 2020.
“The value of contracts awarded during the year 2019 witnessed a remarkable increase after years of spending cuts,” USSABC Economist Albaraa al-Wazeer told Asharq Al-Awsat, noting that despite the slight slowdown in awarding contracts during the fourth quarter of 2019, the focus on improving the infrastructure in the Kingdom, and the accompanying boost in private sector participation, the total value of awarded contracts was recorded at 197.1 billion riyals ($ 52.6 billion), the highest annual value since 2015.