BMI affirms Saudi construction sector growth at 4%

Growth in Saudi Arabia's construction sector will remain steady at 4.1 percent in 2018 despite companies struggling to find enough qualified construction workers, BMI Research said in a new report.

"We will continue to monitor labor flows in the Kingdom, and should the government persist in tightening Saudization standards, we will consider revising our forecast downward," it said, maintaining the sector's annualized average growth at 6.13 percent from 2018 to 2022.  

According to BMI, a looming worker shortage and the Saudization policy "poses a growing risk to the Kingdom’s ability to deliver on its ambitious infrastructure development agenda."

"With the government following through of Saudization policies and the attendant negative effects on the labor pool, we now emphasize that labor risk is coming to the fore and will be a growing hindrance to delivering the scale of construction sector growth and infrastructure investment – which will require immense amounts of manpower," the report noted.

While Saudi Arabia currently scores above the Emerging Markets average on the Labor Availability pillar in BMI's Operational Risk Index with a score of 59.3, the report said there is a mismatch between Saudi skills and those required by the construction sector, which will be "further exacerbated as a looming shortage begins to bite."