"The Saudi economy continues to power ahead, supported by a hugely expansionary fiscal stance and continued loose monetary policy. Meanwhile, despite fast-rising retail sales, surging wages, and a programme to replace expatriate workers with (more expensive) locals, inflation has remained subdued, averaging just 4% in 2012. However, fears are growing that the combination of rapid liquidity growth and a paucity of avenues to invest could result in the creation of asset bubbles, with the present boom in office construction arguably the most likely source.
The rash of building in the capital, Riyadh, and elsewhere is changing the appearance of the kingdom dramatically. The most striking example of this will be the kilometre-high, mixed-use Kingdom Tower in Jeddah, a project led by the Saudi billionaire Prince Al-Waleed bin Talal that began construction earlier this year. Meanwhile, in the capital, Riyadh, building sites pepper the sides of the two main highways—King Fahd Road and Makkah road—ranging from offices and residential blocks to massive new hospitals and universities. "
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