meed-logo

line1 line2 line3
SIGN IN / REGISTER

UAE economy regains regional lead

29 May 2024

 

The UAE has edged ahead of Saudi Arabia again to take the lead in the MEED Economic Activity Index, which assesses the near-term economic health of regional markets, as a gap has opened up between the economic and fiscal performances of the two countries in 2024 to date.

Saudi Arabia and the UAE entered 2024 with similarly buoyant 4% real GDP growth projections from the Washington-based IMF, but have since diverged. In April, the IMF revised its growth forecast for the UAE to 3.5%, and the forecast for Saudi Arabia 2.6%. 

The World Bank has meanwhile maintained a more optimistic 3.9% real GDP growth projection for the UAE in 2024, but an even lower projection of 2.5% for Saudi Arabia.

The trade and fiscal balance performances of the two countries have also diverged. The UAE is forecast for a 7.8% of GDP current account surplus and 4.5% of GDP fiscal surplus, while Saudi Arabia’s current account surplus has narrowed to 0.5% of GDP, while its budget has slipped into a 2.8% deficit.

Oil price impact

Saudi Arabia’s reduction in its growth and slide into fiscal deficit have both partially been brought about by the impact of softer oil prices and Opec-led production cuts, which have naturally hit the more heavily oil-dependent Saudi economy to a greater extent than the more diversified UAE economy. The UAE Central Bank is forecasting a non-oil GDP growth rate of 4.7% for the country in both 2024 and 2025.

Together, the two countries remain comfortably in the lead at the top of the index, due in large part to the buoyancy of both of their projects markets. Contract award values in the past 12 months for both countries were double the long-term average, while new work outstripped completed work twofold in the UAE and fourfold in Saudi Arabia.

Wider market

Elsewhere in the GCC, Qatar and Oman have both seen their real GDP growth slip in 2024, to 2% and 1.2%, respectively – driven by slight weakness in both the hydrocarbons and non-hydrocarbons sectors. Both countries remain in fiscal surplus, however, and have stable projects markets, with work being tendered at or above the long-term average award values and above the rate of completion.

Kuwait is projected to see its GDP contract for the second year in a row as a weaker oil market and production cuts hit hard. Kuwait is the most heavily oil-dependent and least diversified country in the region, with 95% of exports and 90% of government revenue coming from the oil sector, making the country and its real GDP metric highly sensitive to fluctuations in the oil price – though it still has a fiscal surplus. At the same time, the country’s projects market also continues to underperform, with contract awards 40% below the long-term average and 25% below the rate of completion.

Algeria has meanwhile risen up the ranking and boasts a forecast of 3.8% real GDP growth in 2024 – the strongest in the region, according to the IMF. While it is still expected to remain deep in fiscal deficit, inflation is on a downward trend, and the projects market has above-average contract award activity.

Bahrain, despite a projected 3.6% growth rate in 2024, remains in concerning fiscal and debt positions. Its short-term risk rating was recently elevated to the second-highest level by insurance group Allianz. The Bahraini projects market is also in steep decline, with the value of contract awards in the last 12 months coming in at just over a third of the long-term average and at little more than half the level of project completions.

Morocco, Jordan and Egypt are all expected to experience moderate 2-3% real GDP growth rates this year, while continuing to struggle with persisting current account and fiscal deficits. All three countries also have elevated unemployment and government debt, as well as underperforming projects markets, with awards over the past 12 months at two-thirds or less of long-term historic averages.

Iraq is another country with high oil market dependence and oil price sensitivity and is forecast for just 1.4% real GDP growth this year. Short-term risk in the country is also in an elevated state amid political turbulence and weaknesses in the security situation that have seen repeated attacks by non-state actors on oil sector infrastructure. The projects market nevertheless remains nominally steady for now, with sustained award activity at the level of long-term averages and also at the rate of project completions.

Tunisia has sunk to the bottom of the index with a weakened 1.9% growth rate in 2024 and an even lower growth projection of 1.8% in 2025 as the country continues to be caught up in political chaos and an economic crisis. Short-term risk is high, as are the rates of unemployment and inflation. The projects sector is reasonably active, but contract awards remain below the long-term average.

ABOUT THE INDEX

MEED’s Economic Activity Index, first published in June 2020, combines macroeconomic, fiscal, social and risk factors alongside data from regional projects tracker MEED Projects on the project landscape, to provide an indication of the near-term economic potential of Middle East and North African markets.

 

https://image.digitalinsightresearch.in/uploads/NewsArticle/11824050/main.gif
John Bambridge

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

Click here to register
Exclusive from Meed
Related Articles
  • Uncertainty increases for Shell’s $3.9bn gas project in Iraq

    11 June 2026

     

    Uncertainty is increasing for phase two of the Basra Gas Company (BGC) expansion project in Iraq amid fallout from the ongoing regional conflict that started when the US and Israel bombed Iran on 28 February.

    BGC is a joint venture of the Iraqi Ministry of Oil through its subsidiary South Gas Company (51%), London-headquartered Shell (44%) and Japan’s Mitsubishi Corporation (5%).

    In September last year, the World Bank’s International Finance Corporation (IFC) signed a $500m investment deal with BGC for the phase two project.

    The entire phase two project is estimated to be worth $3.9bn, according to the IFC, which says the money will be spent between 2025 and 2030.

    Of the $500m deal that was signed in September, $300m will be provided directly by the IFC, and this was approved by the IFC’s board on 14 January this year, less than two months before the US and Israel attacked Iran.

    The subsequent conflict and the disruption to shipping through the Strait of Hormuz have created major obstacles for the project, according to industry sources.

    One source said: “Many Western workers that were specialists in the oil and gas sector have now left the country due to security concerns.

    “On top of this, it was originally assumed that required equipment for the project could be brought in through the Strait of Hormuz and that operational cash flows could be relied upon to help fund the project.”

    Due to the major disruption to shipping crude exports through the Strait of Hormuz, Iraq has had to dramatically reduce oil production in the Basra region, and, as a result, associated gas production has declined as well.

    One source said: “Right now, the state-owned oil companies in Iraq are in the midst of a financial crisis and it is unlikely that they will be able to contribute to this project in the way that was originally envisioned.”

    The main focus of the BGC phase two expansion project is a new liquefied petroleum gas (LPG) refrigeration train to increase the overall capacity of the upstream facility, where LPG and condensate are obtained through processing of the associated natural gas.

    The scope of the project also includes the construction of a new 22-kilometre-long, 132kV overhead transmission line, which will help to meet the energy demand associated with the project.

    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/17178691/main.png
    Wil Crisp
  • PIF to work with Egypt’s TMG on Saudi real estate schemes

    11 June 2026

    Saudi Arabia’s Public Investment Fund (PIF) and Egyptian real estate conglomerate Talaat Moustafa Group (TMG) have signed a memorandum of understanding (MoU) to explore collaboration on mixed-use real estate projects across PIF-owned developments in Saudi Arabia.

    The non-binding agreement covers potential cooperation across the residential, commercial, hospitality and retail sectors, as well as integrated urban environments. PIF said the partnership would accelerate project delivery and value creation across its portfolio.

    TMG, which has nearly 55 years of experience developing large-scale integrated cities, communities and hospitality projects across Egypt, brings technical and managerial capacity to the collaboration. The company previously signed an agreement with Saudi Arabia’s National Housing Company (NHC) in early 2024 to develop more than 27,000 residential units at the Banan City project in Riyadh’s Al-Fursan suburb.

    The MoU also establishes a framework to attract additional investors to future project phases and is intended to expand private sector participation as investors, partners and suppliers.

    PIF said the agreement forms part of its broader strategy to diversify Saudi Arabia’s economy and develop its urban development and livability ecosystem – one of six strategic ecosystems under its 2026-30 strategy. That ecosystem spans housing, retail, office and community spaces and essential services.

    The MoU is subject to the satisfaction of certain conditions precedent and receipt of all necessary regulatory and internal approvals.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17181887/main.png
    Colin Foreman
  • Egypt signs $420m Gabal El-Zeit wind agreements

    10 June 2026

    Egypt has signed agreements worth $420m for the investment, operation and power purchase of the 580MW Gabal El-Zeit wind power complex in the Red Sea region.

    Gabal El-Zeit 1 has a capacity of 240MW, while Gabal El-Zeit 2 and 3 have capacities of 220MW and 120MW, respectively.

    The agreements were signed between Egypt’s New and Renewable Energy Authority (NREA), the Egyptian Electricity Transmission Company (EETC) and Dubai-based Alcazar Energy.

    Under the agreements, Alcazar Energy will invest in, operate and manage the farms through a project company established under Egyptian law.

    The company will be responsible for technical operations, maintenance and efficiency upgrades while maintaining a minimum capacity of 580MW throughout the contract period.

    The Egyptian Electricity Transmission Company will purchase the electricity generated by the plant.

    The agreements follow earlier efforts to privatise the Gabal El-Zeit wind complex, involving a deal with UK-headquartered private equity firm Actis.

    According to the Egyptian government, the project supports the country’s state ownership policy and national energy strategy, which aim to increase the share of renewable energy in the electricity mix to 45%.

    The Gabal El-Zeit area on Egypt’s Red Sea coast is one of the country’s most established wind power development zones. The latest Gabal El-Zeit wind farm was completed in 2014, according to MEED Projects data. Germany’s Siemens Gamesa was the main contractor. 

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17170360/main.jpg
    Mark Dowdall
  • Majid Al-Futtaim awards $545m Ghaf Woods contract to ECC

    10 June 2026

    Majid Al-Futtaim Properties has appointed Engineering Contracting Company (ECC) as the main contractor for the Capria East, Capria West and Maravelle Residences developments at its Ghaf Woods community in Dubai, in a deal valued at AED2bn ($545m).

    The contract covers the construction of one-, two- and three-bedroom apartments and duplex residences across the two Capria clusters.

    The award adds to a series of major construction contracts Majid Al-Futtaim has issued across its Dubai communities in recent years.

    In May, local contractor Al-Sahel Contracting was awarded a AED700m contract for the Distrikt development, also at Ghaf Woods.

    In 2024, Majid Al-Futtaim awarded AED3bn in contracts for its Tilal Al-Ghaf community, appointing Innovo Build to build 94 waterfront villas at Elysian Mansions and United Engineering Construction (Unec) to deliver 130 villas at the Alaya development.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17170744/main.jpg
    Colin Foreman
  • Saudi Arabia and Turkiye sign railway agreements

    10 June 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia and Turkiye have signed two memorandums of understanding (MoUs) to strengthen bilateral cooperation in the railway and logistics sectors, advancing Riyadh’s ambitions to become a global logistics hub.

    Transport and Logistics Services Minister Saleh Al-Jasser and Turkish Transport and Infrastructure Minister Abdulkadir Uraloglu signed the agreements at the ministry’s headquarters in Riyadh on 9 June, following ministerial talks held with a high-level Turkish delegation. Transport General Authority president Fawaz Al-Sahli and officials from the kingdom’s transport and logistics sector were also present.

    Agreement scope

    The first MoU covers logistics services and operations, including the exchange of expertise, policies and regulations. The second focuses on railway technologies, signalling and communication systems, railway digitalisation, human capacity development, the localisation of the railway industry and measures to reduce the sector’s environmental impact.

    More broadly, the agreements cover cooperation on railway standards and related innovations, the exchange of expertise on the design, operation and maintenance of rail projects, and engineering, infrastructure and safety standards.

    The two sides will also cooperate on research and development, with provision for joint workforce training through specialist railway academies.

    Riyadh said the agreements will help support its National Strategy for Transport and Logistics Services and Saudi Vision 2030, which seeks to position the kingdom as a logistics bridge connecting three continents.

    Turkish projects

    Turkish contractors have already established themselves as key players in the region’s rail sector. In 2012, Yapi Merkezi secured a $2.1bn contract for work on the Haramain high-speed rail network in Saudi Arabia, while Turkish firms Mapa and Limak are leading the ongoing civil works on Dubai’s $5.5bn Metro Blue Line project as part of a China Railway Rolling Stock Corporation (CRRC) consortium. Turkish consultancy Proyapi Muhendislik ve Musavirlik Anonim Sirketi has also won design contracts for the 111km Kuwait National Rail Road project.

    The agreements signed by Saudi Arabia and Turkiye may also give momentum to longstanding discussions around a rail corridor linking the GCC with Turkiye. The route, which has been discussed for years, has gained renewed impetus in recent months as the effective closure of the Strait of Hormuz has pushed regional governments to accelerate the development of overland trade alternatives.

    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/17169958/main.gif
    Colin Foreman