GCC project revival brings hope to multiple sectors

Posted on November 1, 2011

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And the recovery is not restricted to any country or sector.

Port of Dubai Emirate, located on Jebel Ali di...

Infrastructure projects are seeing a massive spend in the GCC. (Wikipedia)

More than USD 67 billion worth of projects have been revived in the Gulf Cooperation Council countries so far in 2011, figures compiled for Zawya indicate. The UAE and Saudi Arabia share top honors with approximately USD 19.5 billion worth of projects revived in each country. These green shoots of recovery are sprouting in spite of the ‘double-dip recession’ scenarios being played out in international markets, and have brought tremendous relief to thousands of large and small contracting companies in multiple sectors that were treading water wondering how long they would be able to survive without business.

The news of projects being revived comes alongside new initiatives being taken by several countries to increase domestic and global investment in sectors that have been languishing for a lack of financing. Dubai, for instance, has launched a USD 1 billion fund focused on its domestic real estate market as the government moves to underpin property prices, which have fallen two-thirds from their 2008 peak. Deloitte says approximately US 140 billion worth of engineering and construction contracts have been either awarded by National Oil Companies or are planned throughout the Middle East in 2011. According to a Zawya scoop, the Egyptian Chemical Industries Company signed a USD 560 million contract with Italy-based Tecnimont to develop its plant for urea using natural gas instead of electricity.

The point of all these numbers is that the project recovery is not restricted to any country or sector — it is wide-ranging and the financing appears to have started flowing again. Banks continue to be cautious, but there is an increased level of liquidity and confidence. Given the events unfolding in the United States and Europe, this confidence can evaporate as quickly as it appears. Risk-aversion is an ephemeral entity constantly at the mercy of market forces. Governments in the Middle East would serve their populations well by consolidating economic and corporate reforms to take advantage of the growing confidence.

— Yazad Darasha

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Posted in: Projects