Total value of contracts awarded in the GCC falls by 40.8%

Muscat: The total value of contracts awarded in the GCC declined by 40.8 per cent year-on-year (y-o-y) during the third quarter of 2022 to $11.1 billion compared to $18.8 billion during the third quarter of 2021, according to a new report.

“All the Gulf Cooperation Council (GCC) countries, barring Qatar that saw a smaller decline, witnessed a double-digit fall in their aggregate the third quarter (Q3) of 2022 in the value of projects awarded,” the Kuwait-based investment strategy and research firm Kamco Invest said in its 'GCC Projects Market Update October-2022'.

GCC project awards contracted during the third quarter of the year as global economic challenges mounted. The decline was intensified by high inflation and continuing supply chain problems mainly due to China’s intermittent COVID-19 restrictions as well as the US-EU sanctions on Russia, the report added.

In addition, the increase in benchmark rates by global and regional central banks to combat runaway inflation also affected project funding.

The UAE overtook Saudi Arabia as the largest projects market in the GCC during Q3-2022 recording a total of $3.7 billion worth of contracts awarded against $3.5 billion awarded by Saudi Arabia. Qatar ranked third during the quarter with total contract awards at $3.4 billion as compared to $3.6 billion during Q3-2021. Saudi Arabia, UAE and Qatar accounted for a combined 96 per cent of the total value of contracts awarded in the GCC during the quarter, the Kamco Invest report said.

Total projects awarded in Kuwait during Q3-2022 declined by 69.1 per cent to $162 million down from $525 million for Q3-2021. Oman witnessed Q3-2022 new projects awards drop of 68.1 per cent y-o-y to $154 Mn. The aggregate value of contracts awarded in Bahrain reached $125 million in Q3-2022 as compared to $659 million during a similar period in 2021, the report said.

“In terms of sector classification, only the chemicals sector witnessed an increase in the value of projects awarded during the quarter recording a $540 million y-o-y increase in new contract awards to reach a total of $1.1 billion during Q3-2022,” the report said.
The total value of contracts awarded in the GCC during the first nine months (9M) of 2022 declined by 26.2 per cent to $53.0 billion, down from $71.7 billion in 9M-2021.

Saudi Arabia accounted for more than half of the total projects awarded in the GCC for the first nine months of the year. The Kingdom’s total value of contracts awarded during 9M-2022 increased by 14.9 per cent to reach $30.3 billion up from $26.3 billion in 9M-2021. The withdrawal of COVID-19-related restrictions and higher oil prices have contributed to the rise in the Kingdom’s projects market during 2022.

Comparatively, the UAE’s aggregate value of contracts awarded during the first nine months of the year dipped 5.8 per cent to $12.4 billion against $13.1 billion in 9M-2021.

GCC project pipeline
The projects market pipeline in the GCC region continues to remain strong with data from MEED Projects showing around $2.50 trillion worth of projects planned or underway in the GCC as of mid-October-2022 as compared to $2.61 trillion at the end of June 2022. The aggregate value of projects in the pipeline (pre-execution stage) in the GCC stood at $858 billion as of October 12, according to data from MEED Projects.

In terms of countries, Saudi Arabia makes up 44.8 per cent ($384.5 billion) of the GCC projects in the pipeline followed by UAE with 17.2 per cent ($147.8 billion) and Kuwait with 14.7 per cent ($125.8 billion). In terms of sectors, the Construction sector accounted for 28.4 per cent or $243.9 billion worth of projects in the pre-execution stage in the GCC followed by the Transport and Power sectors with projects worth $145.6 billion and $122.0 billion, respectively.

Saudi Arabia
Saudi Arabia’s Q3-2022 aggregate value of project awards reached $3.5 billion suffering the worst third-quarter contract awards since the peak of the pandemic in Q3-2020, reflecting worsening global economic forecasts combined with higher inflation. The value of contracts awarded in the Kingdom during Q3-2022 witnessed a quarter-on-quarter (q-o-q) decline of 78.5 per cent and reached $3.5 billion down from $16.5 billion in Q2-2022.

UAE
The UAE projects market recorded the highest aggregate value of contract awards in the GCC during Q3-2022 which reached $3.7 billion, overtaking Saudi Arabia for the first time in 8 quarters. Despite topping the Q3-2022 project awards market in the GCC, the total value of projects awarded in the UAE during Q3-2022 fell 5.9 per cent y-o-y and 11.9 per cent month-on-month. The Emirate represented 33.5 per cent of the aggregate GCC contracts awarded during the quarter as compared to Saudi Arabia which represented 31.8 per cent.

Qatar
Total contracts awarded in Q3-2022 in Qatar dipped 5.1% y-o-y to reach USD 3.4 Bn down from USD 3.6 Bn during Q3-2021.In terms of q-o-q performance, the value of projects awarded more than doubled to reach USD 3.4 Bn up from USD 1.3 Bn in Q2-2022.