Saudi Arabia’s construction industry saw a marked slowdown in the first quarter, when the value of contracts awarded amounted to just SR27.9 billion ($7.4bn), a decline of 39% from the previous quarter and 51% compared to the same period last year.

According to the National Commercial Bank (NCB) Construction Contracts Index for the first quarter of 2016, the government’s fiscal restructuring as a result of declining oil prices led to a cut infrastructure spending, which is causing the construction slowdown.

Although construction activity and projects will proceed, they may be scaled down or see a rescheduled execution over an extended period, NCB said.

In terms of sectors that contributed to the total value of contracts that were awarded in Q1 2016, oil and gas accounted for SR13 billion ($3.4bn), or 47% of the total. The hospitality sector accounted for SR5.9 billion ($1.5bn), or 21%, and residential real estate accounted for SR4.6 billion ($1.2bn) or 16%.

NCB said that Saudi Arabia’s Eastern province received 51% of the awarded contracts, the Madinah region received 13% while 11% of the contracts were awarded in the Northern region.