After witnessing declines over the last several quarters, the GCC project market has finally begun showing healthy recovery signs with the total value of projects awarded during the first quarter surging to hit $26.3 billion, registering a more than two-fold growth over the previous quarter, according to Kamco Invest, a regional non-banking financial powerhouse based in Kuwait.
This was mainly led by pending project awards from last year, in addition to efforts by governments in the region to vaccinate the bulk of the population and limit the spread of the Covid-19 that affected economic activity across the globe.
According to Bloomberg, close to 26.5 million doses have been administered with at least the first dose of the vaccine in the GCC out of a total population of 54 million residents.
Most of the countries have already announced easing or no restrictions with an eye on providing uninterrupted business activity.
Historically, however, the GCC project market has remained under severe pressure ever since the crude oil prices started declining and the onset of Covid-19 was essentially only partly responsible for the slowdown that the sector is witnessing recently.
The region has seen a decline in new project awards over the years as even the existing and ongoing projects were thoroughly scrutinized for their viability in a low spending environment.
With rising debt levels and record high fiscal deficits as revenues declined, governments in the GCC cancelled numerous projects after the fall in oil prices, stated Kamco in its report.
This affected the aggregate project market in the region even before the Covid-19 pandemic started and as projects got completed contractors in the region were seeing declining workloads, it added.
The value of projects planned and under execution in the GCC has remained around the $1.7 trillion mark since 2017. However, at the country level, UAE has seen its share decline consistently over the years whereas Saudi Arabia has seen an increasing share especially post the announcement of the big ticket projects.
The two markets have accounted for more than 84% of the total market over the last two years, said the industry expert.
The project market in Kuwait has witnessed very gradual growth over the last several years. Total value of project planned and under execution stood at $86.1 billion at the end of 2015 that increased to $91.6 billion at the start of May-2021.
