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BMI View: The most prescient factor underpinning our growth forecasts for the freight sector and the
wider economy is the current low oil price, which dominates government decision making. The low price
has led to production being decreased, therefore we expect the Saudi economy will slow considerably
throughout the short term at least. This will lead to certain infrastructure projects being shelved. However,
growth in the rail freight sector is set to reach an impressive double-digit y-o-y increase in 2016 due to
increased investment in this mode of late. Growth in the air and road freight modes will be far less
spectacular in 2016 (1.3% and 0.9% respectively).
Key Updates And Forecasts
? Throughout the medium to longer term, we anticipate solid growth within the Saudi Arabian transport
infrastructure sector, although some non-strategic projects may be scaled back to allow for a focus on
delivering objectives under Vision 2030. Crucially for the future of the sector, the government is studying
opening up all transport sectors to greater private sector participation, which would help offset a
drawdown in government investment over the long-term.
? There are around USD124bn-worth of transport infrastructure projects in BMI's Infrastructure Key
Projects Database for Saudi Arabia, USD51bn of which are currently under construction, underlining the
potential growth in the freight sphere moving forward. This supports our forecast for strong growth over
the short term in the transport sector. While the value of pre-construction phase projects still in
preparatory stages has fallen slightly from 2015 to around USD60bn (some are ready to enter
construction, while some still in the early planning stages), there remains significant project opportunities
across all transport sub-sectors. That said, following a number of years of heavily stocking the project
pipeline, we believe that beyond our 10-year forecast period there will be a slowdown in the number of
major projects coming to market.
? Saudi Arabia's top trade partners over the short term will be China, Japan and the US (for exports), while
key import partners will be China, the US and India (in that order).