Saudi Arabia to lead MENA's construction boom, says BofA Merrill Lynch report
Source: BofA Merrill Lynch , Author: Posted by BI-ME staff
Posted: Tue July 24, 2012 4:23 pm

SAUDI ARABIA. According to a new medium term outlook BofA Merrill Lynch Global Research Report ‘GCC 2020: Time to Shift Gears’, Saudi Arabia is set to take the lead in regional infrastructure investment and construction spending.

Over the next 15 years, the MENA construction sector will be a key beneficiary of the implementation of structural reforms to raise productivity of the non-oil sector and the economy’s potential output. 

“Due to many years of underinvestment, we expect Saudi Arabia to take the lead in terms of construction spending in the MENA region as the Kingdom responds positively to pressing social needs such as labor, housing and education,” said Philip Southwell, Bank of America Merrill Lynch president and country executive, Middle East and North Africa.

The MENA infrastructure and construction market is among the world’s most attractive given its sheer size, according to the report. Forecasting figures predict a total of US$4.3 trillion will be invested in construction projects across the MENA region by 2020, representing an increase of almost 80 percent from today’s spend in the sector.

To put these projections in a broader context, the region is expected to account for 12 percent of the global emerging markets and 4.4 percent of the world construction markets within the next decade. Saudi Arabia is expected to continue leading the way.

Although MENA contract awards have been somewhat disappointing for the period January to May 2012, declining by 41 percent from a year earlier, the main reasons for this decline can be primarily attributed to delays in awarding petrochemicals projects in Egypt and delays in awarding construction and infrastructure contracts in the UAE, Kuwait and Iraq.  

“The construction and infrastructure sub-sectors in Saudi Arabia, however, remain strong, growing by 177 percent over the same period, and currently accounting for 46 percent of the 2012-2013 MENA project pipeline totaling US$448 billion,” said   Mutashar Murshed, Merrill Lynch Kingdom of Saudi Arabia CEO.

“It is a trend we expect to continue,” Southwell said. “With its young and expanding population, Saudi Arabia should remain the most buoyant market, in line with its overall economic development plan. Furthermore, the recent approval of the mortgage law should help to drive growth in residential construction in response to the current housing shortage.”

To see the full report, please click here.

Photo: Philip Southwell, Bank of America Merrill Lynch president and country executive, Middle East and North Africa. 

BofA Merrill Lynch Global Research
The BofA Merrill Lynch Global Research franchise covers more than 3,300 stocks and 880 credits globally and ranks in the top tier in many external surveys. Most recently, the group was named Top Global Research Firm of 2011 by Institutional Investor magazine; No. 1 in the 2012 Institutional Investor All-Asia survey for the second consecutive year; and No. 2 in the 2012 Institutional Investor All-China, All-Europe and All-Japan surveys.

The group was also named No. 2 in the inaugural 2012 Institutional Investor Emerging Markets Equity and Fixed Income survey, covering Emerging Europe, Middle East and Africa; No. 2 in the 2011 All-Latin America and All-America Equity team surveys; and No. 3 in the 2011 Institutional Investor All-America Fixed Income and All-Brazil Research team surveys.

Additionally, BofA Merrill Lynch Global Research was named the No. 1 Global Broker by Financial Times/StarMine, as well as ranking No. 1 in the U.S. and Europe and No. 2 in Asia. The group was also named No. 1 in Asia and No. 2 in the U.S. in the Wall Street Journal Best on the Street 2012 Analysts Surveys. The group was also the winner of the Emerging Markets magazine’s EM Research Global Award for 2010 and 2011.

About Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services.

The company provides unmatched convenience in the United States, serving approximately 58 million consumer and small business relationships with approximately 5,700 retail banking offices and approximately 17,250 ATMs and award-winning online banking with 30 million active users.

Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services.

The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation.

For more information, please visit www.bankofamerica.com

 

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