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GCC Projects Market Report Reveals Five-Year Peak in Awarding Rate

Project awards in Gulf countries are likely to double with signs of détente in the Corona pandemic (Asharq Al-Awsat)
Project awards in Gulf countries are likely to double with signs of détente in the Corona pandemic (Asharq Al-Awsat)
    Riyadh, Kuwait - Asharq Al-Awsat
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GCC Projects Market Report Reveals Five-Year Peak in Awarding Rate

Project awards in Gulf countries are likely to double with signs of détente in the Corona pandemic (Asharq Al-Awsat)
Project awards in Gulf countries are likely to double with signs of détente in the Corona pandemic (Asharq Al-Awsat)

New data revealed a remarkable recovery in the projects market of Gulf Cooperation Council states during Q1 2021. This was traced back to the value input of awarded projects on a quarterly basis doubling.

“After witnessing declines over the last several quarters, the GCC project market showed healthy recovery during Q1-2021 with value of projects awarded more than doubling q-o-q to $ 26.3 Billion,” said a report by Kamco Invest.

“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,” it added.

Citing Bloomberg, Kamco said that 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.”

According to Bloomberg estimates, median Brent crude oil forecast is expected to remain comfortably above the $60 per barrel mark over the next five years.

The report coincides with most Gulf countries starting to practically ease or completely lift some of the restrictions instated to curb the spread of the coronavirus.

Moreover, it revealed that 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, the UAE has seen its share decline consistently over the years whereas Saudi Arabia has seen an increasing share especially post the announcement of big-ticket projects.

The two markets have accounted for more than 84% of the total market over the last two 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.

In terms of quarterly data on project awards, the GCC region witnessed the normal seasonal spike during Q1-2021 with project awards worth $26.3 Billion, more than double the contract awards during Q4-2020 that stood at $12.8 Billion.

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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)

Business activity in Saudi Arabia's non-oil sector accelerated to a four-month high in September, driven by strong demand, which led to faster growth in new orders. The Riyad Bank Saudi Arabia Purchasing Managers' Index (PMI), adjusted for seasonal factors, rose to 56.3 points from 54.8 in August, marking the highest reading since May and further distancing itself from the 50.0 level that indicates growth.

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders, alongside challenges in supply. The improvement in business conditions contributed to a significant rise in employment opportunities, although difficulties in finding skilled workers led to a shortage in production capacity.

At the same time, concerns over increasing competition caused a decline in future output expectations. According to the PMI statement, inventories of production inputs remained in good condition, which encouraged some companies to reduce their purchasing efforts.

Growth was strong overall and widespread across all non-oil sectors under study. Dr. Naif Al-Ghaith, Senior Economist at Riyad Bank, said that the rise in Saudi Arabia's PMI points to a notable acceleration in the growth of the non-oil private sector, primarily driven by increased production and new orders, reflecting the sector’s expansionary activity.

Al-Ghaith added that companies responded to the rise in domestic demand, which plays a crucial role in reducing the Kingdom's reliance on oil revenues. The upward trend also indicates improved business confidence, pointing to a healthy environment for increased investment, job creation, and overall economic stability.

He emphasized that this growth in the non-oil sector is particularly important given the current context of reduced oil production and falling global oil prices. With oil revenues under pressure, the strong performance of the non-oil private sector acts as a buffer, helping mitigate the potential impact on the country's economic conditions.

Al-Ghaith continued, noting that diversifying income sources is essential to maintaining growth amid the volatility of oil markets. He explained that increased production levels not only enhance the competitiveness of Saudi companies but also encourage developments aimed at expanding the private sector's participation in the economy.

This shift, he said, provides a more stable foundation for long-term growth, making the economy less susceptible to oil price fluctuations.