The 2017 outlook for the Saudi Arabian cement sector remains neutral unless the government continues its spending spree. But as the subdued oil price environment calls for a more-diversified economy and spending cuts to rein in costs, cement demand in the kingdom could be in for a gloomy ride in the medium term. By Santhosh Balakrishnan, Riyad Capital, Saudi Arabia.

 The Kingdom of Saudi Arabia (KSA) is the largest economy in the Middle East with a nominal GDP of SAR2.5trn (US$666bn) in 2015.

The IMF estimates that real GDP growth will average just 2.1 per cent over 2016-18, which, coupled with the current subdued oil price environment, will make it tough when it comes to capital expenditure.

Advertisement

This is in stark contrast to the expansionary budgets of 2010-15, driven by growth rates above five per cent and heightened oil prices exceeding US$100/bbl.