The developer of the King Abdullah Economic City, Saudi Arabia’s flagship mega-project, is being forced to reconsider its plans and may delay some work as the global financial crisis stymies attempts to attract foreign investment and dries up financing.

The $27bn (€19.8bn, £17.7bn) city, which is due to welcome its first inhabitants next year, has been hailed as a crucial element of the oilrich kingdom’s plans to diversify its economy and create much-needed private sector employment for a growing young population.

The plan was to attract both foreign and domestic companies to the city to create 1m jobs and a population of 2m people.

But as the financial meltdown hits industries worldwide, the city’s planners are having to increase their focus on luring Saudi businesses to its investment zones.

Financial Times