GCC project awards contracted during 2022 as global economic challenges mounted, with the total value of contracts awarded in the region plunging 18.7% to $93.6 billion from $115.2 billion the previous year, according to Kamco Invest, a regional non-banking financial powerhouse based in Kuwait.
This was the lowest project awards since 2005, barring the pandemic-induced decline in 2020, stated the company in its report.
All GCC countries, barring Saudi Arabia, witnessed a y-o-y decline in their aggregate 2022 value of projects awarded.
Saudi Arabia remained the largest projects market in the GCC during 2022 recording a total of $54.2 billion worth of contracts awarded as compared to $53.9 billion in 2021.
It dominated the GCC projects market during 2022 with 8 out of the 10 largest contracts awarded in the region during the year coming from the kingdom while the remaining two were from Qatar.
The aggregate value of kingdom’s Q4-2022 project awards surged to $18.3 billion the highest quarterly value during the year and the second highest in the last three years despite suffering 13.9% y-o-y decline.
Saudi Arabia was the only country which witnessed an increase in total value of projects awarded among the GCC countries during 2022 after it registered a marginal 0.5% uptick to reach $54.2 billion as compared to $53.9 billion.
The decline in 2022 also reflected limited big-ticket projects outside the Saudi project market.
The UAE ranked second recording total contract awards of $19.2 billion vs. $25.9 billion during 2021, said the Kuwaiti group in its report.
In addition, total value of project awards was above the $100 billion mark every year for the last decade with the exception of the pandemic year (2020) and 2022, it stated.
The decline of GCC contract awards was affected by high inflation and continuing supply chain problems mainly due to China’s intermittent Covid-19 restrictions which are now lifted, it added.
In addition, the increase in benchmark rates by global and regional central banks to combat runaway inflation also impacted project funding in the GCC.
Saudi Arabia, UAE and Qatar accounted for a combined 93.6% of the total value of contracts awarded
in the GCC during the year.
According to the report, total projects awarded in Kuwait during 2022 reached $2.8 billion against $5.2 billion in 2021. Similarly, Oman witnessed new project awards drop by 27.1% y-o-y to hit $2.2 billion while the aggregate value of contracts awarded in Bahrain reached $96 million in 2022 as compared to $2.7 billion during 2021.
In terms of sector, the lion's share of the new contract awards went to the construction industry with the value registering a $3.2 billion y-o-y increase to hit a total of $34.3 billion during 2022.
The growth in the GCC construction sector was mainly driven by the jump in total value of contract awards in Saudi Arabia’s construction sector.
Of the total value of projects awarded in the GCC, nearly 59.2% was awarded by the kingdom, stated the report.
The outlook for 2023 remains bright for the GCC projects market with more than $110 billion worth of projects already in the tender stage, according to MEED Projects, that would mostly translate into awards.
Near-term forecast also remains positive for the region mainly driven by Saudi Arabia’s construction sector and thanks mainly to big-ticket projects such as Neom, it added.-TradeArabia News Service