MIDDLE EAST (The Middle East countries are forecast to see 2.3% to 2.5% GDP growth for the balance of 2019):
A US reconnaissance drone was recently shot down by a missile fired from Iran. The shoot down follows weeks of escalating tensions between Iran & the US, that have included mine explosions on a number of oil tankers transiting the Persian Gulf. This situation could lead to further confrontations that could seriously impact the Middle East construction sector & overall World economy.
Engineering & Construction activity in the remainder of 2019 & going into 2020 is forecast to be positive in Qatar, UAE & Saudi Arabia assuming Iran & the US standoff can be resolved.
Saudi Arabia in concert with other OPEC countries is pumping 750,000 barrels of oil less per day with the aim of maintaining a cost of $60 to $70 a barrel. This will slow down GDP growth in the 2nd half of 2019.
Oil-rich Middle Eastern countries are pinning their hopes on oil prices remaining in the $60 to $70 a barrel range, Saudi Arabia recently indicated that they would be happy to see $70 a barrel for the next couple of years, if that’s the case then 2019 will be a reasonable year for construction in this region of the world, however oil price have fallen by more than 15% in the last three months. In the last three weeks (6/26/2019) oil prices have bounced back to a range of $56 to $68 a barrel. The big wild card is Iran, how will the Trump administration react to the recent hostilities in the Persian Gulf.
The Middle East’s EPC oil & gas sector is forecast to experience a good growth cycle in 2019, assuming oil remains above $60 a barrel range. New construction of oil / gas & infrastructure related facilities is set to see sustained growth in Saudi Arabia in the next two years as the demand for oil related products continues.
75 % of Saudi Arabia’s annual revenue is based on oil sales, there should plenty of construction opportunities in 2019 / 2020 if oil remains at its current price, which is somewhat uncertain.
Saudi Arabia has a new & young leader Crown Prince Mohammad bin Salman, who has come under serious criticism since the death of a journalist Jamal Khashoggi in Turkey. He is / was being groomed for the future role of King & has many ideas on how to improve the economy of Saudi Arabia. Unemployment is currently in the 12% to 13% range, reducing the number of expatriates & using more locals is a challenge that is major goal of the Government. A lot of social changes are ongoing in Saudi Arabia – look for this situation to continue in the future.
The Saudi Arabian Government is trying to reduce the countries dependency on its oil industry & its oil exports by investing in non-oil related business’s, look for this trend to continue in 2019 & beyond, in the meantime with oil trading above $55 a barrel look for continued substantial CAPEX expenditures on oil related projects in 2019 & beyond The housing / residential / commercial/ infrastructure construction sectors are also expected to see growth opportunities in 2019 & beyond, the ongoing conflict in Yemen continues to drag on.
Abu Dhabi is the most expensive Gulf Cooperative Council (GCC) countries for construction services. Abu Dhabi is forecast to spend more than $25 billion on oil / gas, infrastructure & commercial construction projects in the next five years. Construction activity is starting to slow down perhaps by 5% from a year or two back, however the outlook for construction work still remains somewhat positive in the (GCC) region.
Israel’s economy & construction market continue positive as we move into the 2nd half of 2019. There are plenty of energy & non-oil related construction projects & opportunities that are still to be had.
Some Middle East / North African countries such as Libya, Tunisia, Syria, Jordan & Algeria continue to endure political & economic stagnation that translates to a lackluster construction sector.
Qatar will carry on being one of the world’s fastest growing economies & construction markets even with the economic related boycott from its neighbors. Qatar is affluent with its enormous offshore gas fields. Qatar is currently focused on its ongoing construction / infrastructure work related to the 2022 World Cup.