UAE maintains regional economic edge
14 January 2025
Heading into 2025, the UAE and Saudi Arabia continue to maintain their significant lead in the MEED Economic Activity Index. These opportune markets sit alongside three of their GCC peers – Oman, Qatar and Kuwait – as economies whose real GDP is supported by relatively robust hydrocarbon revenues.
In 2025, the GCC economies are forecast to grow by an unweighted real GDP growth rate average of 3.3%, compared to just 1.4% in 2024, according to the latest IMF estimates. Across the countries featured in the index, the figure for 2025 was 3.2%, compared to 1.8% in 2024.
One significant reason for this uptick is the subsiding of the Red Sea shipping disruption. Risks remain, but a year of intensive maritime patrols by several international naval coalitions has reduced the risk to commercial vessels. The shipping route has not seen a sinking since the first half of 2024, and there has not been a serious incident involving a Houthi strike on a vessel since September.
At the same time, logistical workarounds by the commercial transport sector have mitigated the disruption and overall risk to regional trade activity.
In terms of the hydrocarbons sector, the IMF expects the average price of oil to be $72.84 a barrel in 2025, compared to $81.29 a barrel in 2024. Alongside continuing Opec+ restrictions on oil production, this points to a slight weakening of oil revenues this year. Government spending plans among the region’s oil exporters are unlikely to be duly affected in the short term however, as such variables have already been factored into near-term expenditures.
Strong lead
The UAE tops the January 2025 MEED Economic Activity Index, with a forecast real GDP growth rate of 4.5%, broad fiscal surplus and strong non-oil growth backed by the ongoing strengthening of its projects market, which saw the award of $82bn-worth of contracts in 2024. This value exceeded project completions in the market in 2024 by almost $50bn and sits well above the long-term average.
Looking ahead, there are projects worth an estimated $8bn in the bidding phase.
Saudi Arabia’s real GDP is projected to grow by a similarly buoyant 4.6% in 2025. Although the kingdom is expected to run a fiscal deficit this year, this is largely a function of the government’s expansionary spending on strategic projects and development programmes.
Riyadh’s project spending hit new heights in 2024, with contract awards reaching a record value of $142bn and exceeding the value of project completions in the market by almost $90bn. The country also has an extraordinary $250bn-worth of project value currently under bid.
Moderate activity
Fellow GCC members Oman, Qatar and Kuwait follow in the index in a tight cluster, supported by real GDP forecasts in the 2-3% range, fiscal projections for top-line surpluses and moderate projects market activity.
Oman’s projects market is the most buoyant, with contract awards growing to $11bn in 2024 – double the $5.5bn in completions.
Qatar’s project award activity meanwhile dipped to $16bn in 2024, below the country’s long-term averages, though it still outpaced the $9bn in project completions last year.
Kuwait’s project activity grew from $6.3bn in awards in 2023 to $9bn in 2024, outpacing completions by $3.5bn and broadly matching long-term contract award averages.
All three countries have strong project pipelines, with $15bn-$25bn-worth of tenders each in the bidding phase.
Much improved
Morocco, Algeria and Iraq follow with sharply improved scores compared with mid-2024, in part due to more buoyant economic projections, including real GDP growth forecasts in the 3%-4% range in 2025.
Though weighed upon by serious fiscal imbalances, all three countries have strongly improved project markets, with contract awards surging from $2.4bn to $8bn in Morocco between 2023 and 2024, from $3.7bn to $21bn in Algeria, and from $14bn to $24bn in Iraq. The awards in all three countries also surpassed last year’s project completions and historic award averages.
Market stragglers
Bahrain comes next in the index as the lowest-performing GCC nation for reasons unrelated to its real GDP performance, which sits around 3%, but instead due to its fiscal and project sector weakness.
Manama is overspending, but not on critical infrastructure. The result is a projects sector that saw just $2.6bn-worth of awards in 2024, well below the $7.5bn in completions, which included the end of work on the $4bn Sitra Refinery, and below the $3.8bn long-term average.
The index is rounded out by Jordan, Egypt and Tunisia, whose economic situations are all fragile.
Jordan has a 2.5% growth projection, but high fiscal imbalance and unemployment. Subdued project activity in the country barely recovered to long-term averages in 2024 – after a dismal performance in 2023 – due to a $1bn liquefied natural gas terminal contract award.
Egypt, while projected for 4.1% growth in 2025, is grappling with 30% inflation, a deep fiscal deficit and a contracting projects sector. There were $19bn of awards in 2024, falling below both the 2023 figure and the long-term average for the market.
Tunisia, with a growth projection of just 1.6%, is failing across most metrics as it continues to grapple with a political and economic crisis. The country’s projects activity is no exception, with the value of contract awards in 2024 falling below 25% of 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.
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Iraq enters era of resilience, reform and rising risks
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Iraq’s projects market is at an inflection point. The country has built a sizeable and increasingly diverse projects pipeline, backed by ambitious national plans and an improving reform narrative. But according to MEED’s newly updated Iraq Projects Market report, the near-term outlook is now being tested by renewed regional volatility and persistent structural constraints at home.
Iraq is the Middle East and North Africa’s fifth-largest economy by nominal GDP, yet it remains heavily exposed to the hydrocarbons cycle. Oil and gas generate about 90% of government revenues and more than 40% of GDP, a dependency that shapes annual capital spending and the bankability of public-private partnership (PPP) deals. Earlier this year, the IMF forecast GDP growth of 3%-4%. In light of the latest regional conflict dynamics involving the US and Israel with Iran, that growth outlook is expected to soften as investor risk perceptions rise and supply chains face renewed stress.
Even so, Iraq’s projects market is not starting from a blank slate. By the end of March 2026, almost $120bn of contracts were in execution, with a further $300.4bn in the broader pipeline. The scale of that opportunity is underpinned by enduring reconstruction requirements, urgent energy-sector needs and a policy push to translate oil wealth into long-lived productive assets.
Reconstruction needs
Nearly a decade after the official end of the Islamic State conflict, Iraq’s reconstruction gap remains substantial. Estimates put the shortfall at about $88bn, reflecting the long tail of damage to housing, utilities, public buildings and transport links. Southern and central regions dominate the live pipeline, largely because they sit close to Iraq’s oil heartlands. Basra, in particular, is pivotal, anchoring major upstream activity and vital export infrastructure.
At the policy level, Iraq Vision 2030 signals a long-term ambition to diversify into tourism, agriculture, industry and digital transformation. The government’s immediate delivery vehicle is the National Development Plan (NDP) 2024-28, which commits more than $17bn a year in capital expenditure and prioritises energy, transport, housing and water infrastructure. This shift is reinforced by Iraq’s Green Growth Framework (2026), indicating that future procurement may place greater weight on efficiency, emissions reduction and climate resilience.
Macro risk
Despite policy ambition, the most immediate determinant of Iraq’s fiscal room is the oil price. A $10-a-barrel drop can reduce government revenue by an estimated $7bn-$9bn annually. Such sensitivity matters because infrastructure spending is still largely funded by the public purse. Oil price swings affect project awards, payment cycles and the government’s willingness to assume up-front capex obligations.
Iraq’s execution environment continues to be defined by bureaucratic delays, unclear land titles and opaque procurement processes. These factors can add 12-24 months to average delivery timelines. Nevertheless, there are signs of adaptation. PPP legislation is advancing, and developer-led models are gaining traction in large housing programmes. Furthermore, there is a growing reliance on international project management consultancy (PMC) firms—such as Hill International, Worley, and AtkinsRealis—to bridge capacity gaps and improve governance, cost control and scheduling.
Hydrocarbon driver
Oil and gas upstream remains the single largest driver of capital expenditure. Major developments, including the Gas Growth Integrated Project (GGIP) and Mansouriya, sit alongside a push to reduce gas flaring and expand downstream processing. The objective is to sustain export revenues while improving domestic fuel availability.
The power sector is even more urgent. Iraq faces an estimated 8-10GW generation shortfall, which keeps electricity supply at the centre of political risk. This gap is driving rapid procurement of generation capacity and grid upgrade contracts. Beyond traditional infrastructure, Iraq is also moving on digital adoption. Smart city pilots and fibre rollouts are attracting regional technology investors, while AI-enabled data centre projects are beginning to emerge.
Investment targets
Foreign direct investment (FDI) remains below $3bn a year, a low figure relative to market size. The most active investors outside the oil sector include the UAE, Saudi Arabia and Kuwait. To convert interest into deals, the National Investment Commission (NIC) is pursuing streamlined licensing and investor-protection reforms. A “one-stop shop” approach has reportedly reduced registration timelines for foreign investors from months to weeks in key sectors.
Investor protection mechanisms, such as access to international arbitration, are being strengthened, though enforcement remains a concern. Iraq’s three free zones—Basra, Karbala and Nineveh—offer additional incentives including tax holidays and customs exemptions, provided they can be paired with reliable utilities and bankable arrangements.
Conflict premium
The latest escalation involving the US and Israel with Iran has increased Iraq’s security risk premium. This is inflating materials costs and disrupting supply chains near eastern border zones. Even where projects are far from conflict areas, contractors are pricing in higher contingency for logistics and insurance. Iraq must also balance deep economic ties with Iran—particularly in energy—with Western investor expectations and sanctions-related compliance.
With more than 60% of its population under 25, Iraq has a potential demographic dividend, but it also faces immediate employment pressure and a shortage of skilled technical labour. Iraq’s projects market outlook for 2026 is best described as cautiously constructive. The pipeline is deep and the need is undeniable, but delivery will hinge on whether Iraq can translate plans into predictable execution. If progress on procurement and contract enforcement continues, Iraq can sustain a broad-based market that extends beyond hydrocarbons.
Click here to learn more about MEED’s newly updated Iraq Projects Market report
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Retal to develop project in Oman’s Sultan Haitham City
11 May 2026
Saudi Arabia’s Retal Urban Development Company has entered Oman with its first development agreement, signing a deal to build more than 2,000 residential units in Sultan Haitham City in Muscat.
In a statement to the Saudi Stock Exchange (Tadawul) on 11 May, the company said it had signed an agreement with Oman’s Ministry of Housing & Urban Planning to develop an integrated residential community at an estimated cost of SR3bn ($823m).
The community will be developed across zones 3, 15 and 17 within Sultan Haitham City, covering a total area of 1.3 million square metres.
The project will include villas and apartments, alongside commercial and mixed-use elements and community facilities.
Retal said the development will be delivered through an off-plan sales model and is expected to take nearly nine years to complete.
The first phase of the Sultan Haitham City project includes the development of a 5 square-kilometre city centre and six of the development’s 19 planned neighbourhoods. The first phase is set for completion by 2030.
US-based architectural firm SOM unveiled masterplan proposals for Sultan Haitham City in August 2024.
The final phase of the project is expected to be completed by 2045.
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Qiddiya seeks firms for light rail transit system
11 May 2026
Saudi gigaproject developer Qiddiya Investment Company (QIC) has requested contractors to express interest in a contract to design and build the first phase of the light rail transit system at Qiddiya Entertainment City.
The notice was issued on 5 May, with firms given until 20 June to submit expressions of interest.
The project, also known as the Primary Urban Axis, comprises a 22-kilometre automated, driverless rail line as part of its first phase.
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QIC officially opened the Six Flags theme park to the public in December last year.
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RCRC awards $1bn Sheikh Jaber Al-Sabah Road contract
11 May 2026
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Saudi Arabia’s Royal Commission for Riyadh City (RCRC) has awarded an estimated SR5bn ($1.3bn) contract for the construction of the Sheikh Jaber Al-Sabah Road project in Riyadh.
The contract was awarded to the joint venture of Riyadh-based Al-Rashid Trading & Contracting Company (RTCC) and Turkiye’s IC Ictas.
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Aecom to supervise Dubai Loop construction
11 May 2026
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US-based Aecom has been selected for a contract to undertake design review and construction supervision services for the Dubai Loop transportation system.
The contract was tendered by Dubai’s Roads & Transport Authority (RTA), which signed a construction agreement with Elon Musk-backed firm The Boring Company.
The first phase comprises a 6.4-kilometre route with four stations, linking the Dubai International Financial Centre (DIFC) and Dubai Mall.
Stations will be located at DIFC 2, ICD Brookfield Place, Dubai Mall Zabeel Parking and Burj Khalifa.
The first phase is expected to cost about AED565m ($154m) and be delivered within one year of design work and other preparations being completed. Tunnelling is expected to begin in the second half of this year.
The latest update follows the appointment of Parsons Corporation to deliver programme management services for the Dubai Loop transportation system.
Next phase
The second phase will connect the Dubai World Trade Centre and DIFC with Business Bay.
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The pilot route is expected to serve around 13,000 passengers a day, while the full route is projected to have a capacity of about 30,000 passengers a day.
The RTA and The Boring Company signed a memorandum of understanding on the sidelines of the World Governments Summit in Dubai in February last year to explore the development of the Dubai Loop transportation system.
The Dubai Loop is expected to be similar to The Boring Company’s Las Vegas Convention Centre (LVCC) Loop project. The LVCC Loop is a 2.7km underground tunnel system that connects different convention centre halls, reducing walking time across the site to about two minutes.
The LVCC Loop has been in operation since 2021. It uses Tesla Model 3 cars to carry passengers between five stations. The Boring Company began construction in November 2019 at an estimated cost of $49m.
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