meed-logo

line1 line2 line3
SIGN IN / REGISTER

Resurging projects uplift UAE and Saudi economies

29 January 2024

 

The UAE and Saudi Arabia are almost neck-and-neck – with the UAE marginally in the lead – at the top of the MEED Economic Activity Index, which assesses the near-term economic health of regional markets.

In October 2023, both countries were forecast by the Washington-based IMF to grow at a region-beating rate of 4% in real GDP terms in 2024, though without taking into account the deepening of voluntary oil production cuts in November by half a dozen Opec+ countries, among them Saudi Arabia and the UAE.

In the Q4 Opec+ meeting, in addition to the voluntary cuts announced in April 2023 and extended until the end of 2024, Saudi Arabia and the UAE agreed to cut their oil production by a further 1 million barrels a day (b/d) and 163,000 b/d, respectively, until the end of Q1 2024.

The impact of these additional cuts, as well as the trailing of the oil price below the IMF’s forecast of $79.9 a barrel in 2024, remains to be seen, but – other factors notwithstanding – it should be negative.

In spite of this, some think tanks and ratings agencies have given both countries even more bullish real GDP projections since the start of the year. Aljazira Capital has forecast a 4.4% real GDP growth figure for Saudi Arabia in 2024 and ratings agency Moody’s has projected an even higher 4.6% growth rate.

Aljazira Capital stated that weaker oil revenues “would be offset by growth in non-oil revenues” from the private sector amid the implementation of non-oil spending programmes under Saudi Vision 2030.

For the UAE, ratings agency Standard and Poor’s (S&P) meanwhile forecast 5% growth in 2024 – also driven by the non-oil sector, which grew by 6% in 2023, led by hospitality, retail and financial services.

Beyond the headline figures, both countries are keeping their inflation and fiscal balance in check and have relatively contained unemployment levels. However, Saudi Arabia’s figures of 5.6% unemployment and 23.8% youth unemployment both remain well above average for the GCC countries.

Projects boom

Both countries have also seen a surge in projects activity. Together, they were responsible for the bulk of the $253bn in contracts that made 2023 a record year for regional project activity.

In Saudi Arabia, the total awards value for the year was 59% higher, rising to $95bn – double the long-term average value of project awards over the preceding 10 years. New work also outstripped project completions by a ratio of almost four to one, adding $70bn to the net value of projects under execution.

In the UAE, the value of project awards leapt by 175% to hit $81.5bn – a value almost close to double the long-term average. Significant project completions worth more than $48bn nevertheless weighed on the market and reduced the net change in the value of projects under execution to $33bn.

Other markets

The other GCC countries have mixed outlooks, with varying growth forecasts and projects market activity.

Qatar has a modest 2.2% growth projection for 2024 and has maintained recent project awards at a level matching the rate of completion of legacy projects, as well as the long-term award value average.

Kuwait’s economy was given a 2024 growth forecast of 3.6% by the IMF in October, after contracting in 2023, but this does not include the voluntary production cuts announced in November. The country’s projects market meanwhile continues to slip, with its 2023 awards sitting at just 76% of its average.

The revision of Oman’s 2024 growth forecast by the IMF in January provides a glimpse into the impact of the additional voluntary oil production cuts announced in November for Q1, with the country’s real GDP growth projection for the year having been revised down markedly from 2.7% to 1.4%. The country’s projects market is nevertheless largely holding its own, with its 2023 contract awards clocking in at 88% of the long-term average, even as completions slightly exceeded new awards.

Bahrain continues to struggle with a persistent fiscal deficit and deepening debt, and the squeezing of the country’s cash flow is being reflected in its sinking projects market. The $1.2bn in awards in 2023 flagged 32% behind completions and 65% below the market’s long-term average.

Morocco has increasingly emerged as one of the least troubled markets in the wider Middle East and North Africa region, with a solid 3.6% growth projection for its largely non-hydrocarbons economy. Inflation in the country has also been curbed and the $2.4bn in project awards in 2023 exceeded completions by 24%, despite dipping below the long-term average.

Egypt is heading into 2024 facing severe economic headwinds, with high inflation amid falling foreign exchange reserves and the looming prospect of a further currency devaluation, short of an IMF bailout. The country’s mounting fiscal trouble has been reflected by falling projects activity, with the $12.6bn in awards in 2023 being both below the level of completions and 44% below the long-term average.

Tunisia has a forecast of just 1.9% real GDP growth, but an unexpected burst of $1.5bn in project awards in 2023 boosted projects activity – with the value nearly double both completions and average awards.

Algeria, Iraq and Jordan face various headwinds, but chief among their problems is that their middling growth rates are insufficient to accommodate either their rising debt or double-digit unemployment. All three countries also had projects markets that underperformed in 2023, with award values below both the level of completions and long-term averages.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11466710/main1207.gif
John Bambridge

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Opec+ approves fourth consecutive oil output quota hike

    8 June 2026

    The Opec+ alliance of oil producers has agreed a fourth increase in its oil output targets in as many months, even though the conflict involving Iran, the US and Israel is still preventing several members from pumping more crude.

    The war has disrupted oil flows via the Strait of Hormuz, creating a severe supply crisis. Key Opec+ members, including Saudi Arabia, have been unable to supply customers in full since the end of February. The crisis for Opec+ deepened when the UAE left Opec after almost 60 years of membership.

    Seven core members of Opec+ – which comprises Opec countries and a group of non-Opec states led by Russia – raised their output quotas from April to June by almost 600,000 barrels a day (b/d).

    In practice, however, the group’s production has fallen sharply due to export cuts by Gulf members, averaging 33.19 million b/d in April compared with 42.77 million b/d in February, according to Opec figures.

    At the latest meeting of Opec+ oil ministers on 7 June, the seven members agreed to increase targets by 188,000 b/d from July, Opec said in a statement. This matches the June hike, which was adjusted down from monthly increases of 206,000 b/d in April and May to take account of the UAE’s exit.

    Iraq’s oil output quota will rise by 26,000 b/d from July under the agreement, an oil ministry spokesperson told Iraq’s state news agency.

     

    On 5 June, oil prices fell to about $93 a barrel as traders gained confidence that renewed conflict between the US and Iran was becoming less likely. Prices were close to $72 before the war began on 28 February.

    Brent crude rose sharply at the start of this week after Iran launched ballistic missiles at Israel on the night of 7 June, heightening fears that US-Iran peace talks might once again collapse. Israel has since retaliated with strikes in western and central Iran, despite calls from US President Donald Trump not to respond to the Iranian missiles.

    Brent crude jumped by around 4.5% early on 8 June and was trading at $97.52 a barrel as of 11am GST.

    The seven key Opec+ members are increasing production as part of the gradual unwinding of a 1.65 million b/d production cut agreed in 2023 by the coalition, which at the time included the UAE.

    From July, the seven have about 567,000 b/d of the original cut left to return to the market – taking into account the UAE’s exit from 1 May – according to Reuters calculations.

    That would imply the remainder of the cut will be unwound by the end of September if Opec+ maintains monthly hikes of about 188,000 b/d in August and September.

    The seven of the 21 Opec+ members who met on 7 June were Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman. In recent years, only these seven – plus the UAE when it was a member– have been involved in the group’s output-policy decisions.

    In a separate meeting on Sunday attended by all Opec+ members, ministers made no change to the group-wide output policy in place until the end of 2026, Opec+ said in another statement.

    Opec+ is also reviewing members’ oil production capacity to use as a reference for 2027 production baselines, from which quotas are set. On Sunday, the group reaffirmed the importance of completing the assessment, the statement said.

    ALSO READ: UAE to continue working with Opec, energy minister says

     

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17143267/main.jpg
    Indrajit Sen
  • Deme wins dredging work for Tunisian ports

    8 June 2026

    The Office de la Marine Marchande et des Ports (OMMP) has awarded Belgium’s Deme a contract to carry out dredging and marine works at three ports in Tunisia.

    The project covers works at Sousse, Menzel Bourguiba/Bizerte and Rades/La Goulette. Deme will first construct containment dykes at the ports of Menzel Bourguiba and Sousse. The two ports are located more than 200 kilometres apart, which the contractor says will require careful planning, coordination and optimised logistics.

    The second phase involves extensive dredging works at all three locations, for which Deme will deploy a trailing suction hopper dredger.

    The project will use three distinct approaches to sustainably and efficiently manage dredged material, tailored to the characteristics of each location.

    In Sousse and Menzel Bourguiba, the material will be reused for land reclamation. In Bizerte, a combined approach will be adopted, with part of the material used for reclamation at Menzel Bourguiba and the remainder disposed of offshore. In Rades and La Goulette, all dredged material will be pumped ashore to a designated area.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17143268/main.jpg
    Colin Foreman
  • Egypt firm wins South Med desalination design contract

    8 June 2026

    Cairo-headquartered Engineering Experience Group (EEG) has won a design and engineering services contract for the planned South Med seawater reverse osmosis desalination plant in Al-Dabaa, Egypt.

    The South Med project will have a production capacity of 160,000 cubic metres a day.

    Located in Egypt’s Matrouh governorate on the Mediterranean coast, it is being developed for the Engineering Authority of the Armed Forces’ Water Management Department.

    Local firm Elsewedy Electric Infrastructure previously announced it was the main engineering, procurement and construction contractor for the project.

    In a company publication, Elsewedy indicated that project activities are expected to run from 2026 to 2028, suggesting commercial operations could begin around 2028.

    As MEED understands, Elsewedy has engaged EEG to provide engineering services. The scope includes detailed design, shop drawings, as-built documentation, project coordination and 3D building information modelling services.

    The company said the work will cover electrical, instrumentation and control systems, architecture, structural and steel works, mechanical, electrical and plumbing systems, wet and dry utilities, roads and landscaping.

    According to company data, the desalination sector accounts for about 25% of EEG’s water projects portfolio. The company said it has completed about 72 projects in the water sector to date, including wastewater treatment, industrial wastewater treatment, water treatment and desalination schemes.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17143025/main.jpg
    Mark Dowdall
  • Israel strikes Iranian petrochemicals complex

    8 June 2026

    Israel has hit Iran’s Mahshahr petrochemicals complex in the country’s Khuzestan province, according to the Israeli military and reports in Iranian news outlets.

    The Israeli military said that it was targeting Karun Petrochemical Company.

    In a separate statement, Mahshahr Petrochemical Special Economic Zone said that workers at the site had been evacuated.

    Karun Petrochemical Company produces a range of products.

    It has the nameplate capacity to produce 40,000 tonnes a year (t/y) of toluene diisocyanate (TDI) and 40,000 t/y of methylene diphenyl diisocyanate (MDI).

    It also has the capacity to produce 30,000 t/y of aniline and 92,300 t/y of nitric acid (HNO3).

    TDI and MDI are both used primarily as building blocks to create polyurethane products.

    TDI is mostly used to make flexible polyurethane foams and MDI is usually used to create rigid foams, adhesives, sealants and elastomers.

    Aniline is also used to make urethane polymers, as well as being used in the dye industry, where it is a precursor to indigo, which is used to dye jeans blue.

    Nitric acid is a highly corrosive mineral acid and its main industrial use is to produce fertilisers.

    The Mahshahr petrochemicals complex is one of the most important petrochemical complexes in Iran. It was previously hit by Israel in strikes in April, forcing evacuations.

    On 4 April, Israeli forces targeted at least eight major petrochemical complexes in the Mahshahr region, along with critical supporting infrastructure, including power plants that supply electricity to the industrial zone.

    Mahshahr accounts for approximately 28% of Iran’s petrochemicals production.

    Iran’s petrochemicals industry is the country’s second-largest source of export revenue after crude oil.

    The country has a nominal production capacity of about 95 million t/y of petrochemicals, although actual output prior to the latest conflict was significantly lower due to persistent shortages of electricity and natural gas.

    Iran has invested tens of billions of dollars in developing its petrochemicals infrastructure, and if facilities are severely damaged, rebuilding would pose a major financial and technical challenge.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17142886/main.jpg
    Wil Crisp
  • Ora awards Unec a $517m UAE construction deal

    8 June 2026

    Egypt’s Ora Developers has awarded local contractor United Engineering Construction (Unec) a AED1.9bn ($517m) main works contract for the first phase of the Bayn mixed-use development in Ghantoot, between Dubai and Abu Dhabi.

    The 31-month construction contract covers 614 residential units, including townhouses and standalone villas, across Cluster B (Y Waterway), Cluster C (Y Lagoon) and Cluster D (Y Lagoon 2). The scope also includes associated infrastructure and landscaping works.

    In a statement, Ora said mobilisation started immediately, with construction commencing on 1 June. The programme includes interim milestones for each cluster.

    In December last year, NMDC Group won a AED142m contract to execute enabling works for the Bayn masterplan.

    UK-based firm Mace has been appointed to lead the overall project management. Canadian firm WSP will serve as the masterplan, infrastructure, landscape and water bodies design consultant.

    US-based Aecom will provide construction supervision services. Hong Kong’s 10 Design is the project’s architectural concept design consultant. Local firm Dewan Architects & Engineers is the project’s design consultant and architect of record. The UK’s Currie & Brown is the cost consultant.

    MEED reported in April that Ora Developers signed a land acquisition agreement with Abu Dhabi-based developer Modon Holding to acquire an additional 4.8 million square metres (sq m) of land in Ghantoot. The acquisition will increase the Bayn masterplan from 4.8 million sq m to 9.6 million sq m.

    Ora added that total investment in the masterplan is expected to reach AED30bn on completion.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17142916/main.jpg