How will the low oil price affect the dynamic construction markets of the GCC in 2016? This was the question that MEED set out to answer in one of the biggest projects that I have worked on this year – an analysis of the outlook for GCC construction. The full report can be purchased here
Not surprisingly given the record lows in oil prices the overall climate is one of fiscal belt tightening. Capital expenditure overall is set to fall as budget deficits rise. Data from MEED Projects showed that in 2015 awards worth $88bn were made, a 22 per cent reduction on 2014. Forecasts for awards from MEED Insight show a further, although much less pronounced, drop in 2016.
The findings for the individual GCC markets were as varied as the countries themselves. In 2015 the UAE recorded its first fall in project awards since 2011, whereas Kuwait reached an all time peak. However with the £4.3bn contract award for Kuwait’s airport expansion rejected by the State Audit Bureau, the market remains challenging from a bureaucratic perspective. By the end of 2015 Saudi Arabia had already begun cutting back spending and started to put projects on hold. More of this is expected in 2016 with the budget for transport reduced by an enormous 60 per cent. Doha and Dubai meanwhile pledged to increase spending in 2016.
For more analysis visit MEED