The Gulf Cooperation Council (GCC) experienced a sharp decline in total project awards during the second quarter of 2024, with figures dropping by 19.7% to $51.7 billion, down from $64.3 billion in the same period last year. This significant downturn is primarily attributed to steep reductions in project awards in Qatar and the UAE, according to a report by Kamco Invest, a leading regional financial firm.
Sectoral Breakdown and Regional Impact
The construction sector, which accounted for 47.1% of the total contracts awarded in Q2, witnessed a notable drop in the UAE, contributing to a broader regional decline. Construction awards in the UAE plummeted by 62.9%, falling from $11.7 billion in 2023 to $4.4 billion in 2024. Consequently, construction’s share of total contracts in the UAE decreased to 26.6% during this period. Furthermore, no new projects were awarded in the chemical sector in Q2-2024, contrasting with the $3.6 billion awarded in the same quarter of the previous year.
Growth in the Oil and Gas Sectors
Despite the overall downturn, some sectors saw significant growth. The UAE’s gas sector, for example, experienced a dramatic increase in project awards, rising over sixfold from $848 million to $5.6 billion year-on-year. Similarly, the oil sector in the UAE saw a fivefold increase, with contracts growing from $819 million to $4.3 billion.
Saudi Arabia’s Resilience Amid Economic Challenges
In Saudi Arabia, despite lower oil production, project awards rose by 9.9% to $30.6 billion in Q2-2024, up from $27.8 billion in the same period last year. This increase was largely driven by the acceleration of Neom projects, aligning with Saudi Arabia’s Vision 2030 initiative.
Economic Outlook and Future Prospects
The International Monetary Fund (IMF) has revised down its real GDP growth forecasts for all GCC member states, citing regional insecurity and ongoing oil production cuts. These factors have contributed to the year-on-year decline in GCC contract awards during the second quarter.
The total value of project awards in the UAE dropped by 23.6%, reaching $16.3 billion in Q2-2024, compared to $21.4 billion in the previous year. In Qatar, project awards saw a dramatic 98.5% decline, plunging from $10.5 billion in Q2-2023 to just $162 million in Q2-2024. This sharp reduction in Qatari contracts significantly impacted overall GCC contract growth during the quarter.
Notable Increases in Kuwait
Conversely, Kuwait saw a 33% year-on-year increase in project awards, rising to $2.3 billion in Q2-2024 from $1.7 billion in the previous year. Sectoral growth was observed in gas, power, and transport projects across the GCC, with gas sector contracts increasing by 17.3% to $14 billion, and power and transport sector contracts each growing to $9.8 billion, marking increases of 9.7% and 27.3%, respectively.
Kamco Invest reports that as of July 2, the total value of planned or pipeline projects across the GCC stands at $3.5 trillion. Saudi Arabia holds the largest share, with $1.87 trillion (54%) of ongoing or upcoming projects, followed by the UAE with $856.9 billion and Oman with $245.5 billion.
Excluding ongoing contracts, the total value of upcoming projects in the GCC is estimated at $1.43 trillion, with Saudi Arabia leading the MENA region, representing 51.6% of these projects.
