MIDDLE EAST (The Middle East countries are forecast to see 2.3% to 2.5% GDP growth for the balance of 2019):
Oil-rich Middle Eastern countries are pinning their hopes on oil prices remaining in the $55 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 prices have fallen by more than 25% in the last three months, but in the last three weeks (3/26/2019) oil prices have bounced back to a range of $56 to $64 a barrel. The Middle East’s EPC oil & gas sector is forecast to experience a good growth cycle in 2019, assuming oil remains in the $60 a barrel range. New construction of oil / gas and 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 if oil remains at its current price which is uncertain. Saudi Arabia recently announced that it would scale back its daily oil production rate in the anticipation that this would drive oil prices higher. Saudi Arabia has a new and 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 and 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 and 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 and its oil exports by investing in non-oil related businesses, look for this trend to continue in 2019 and beyond. In the meantime, with oil trading above $55 a barrel look for continued substantial CAPEX expenditures on oil related projects in 2019 and beyond. The housing / residential / commercial/ infrastructure construction sectors are also expected to see growth opportunities in 2019 and 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 and 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 and construction market continue positive as we move into 2019. There are plenty of energy and non-oil related construction projects and opportunities that are still to be had.
Some Middle East / North African countries such as Libya, Tunisia, Syria, Jordan and Algeria continue to endure political and economic stagnation that translates to a lackluster construction sector.
Qatar will carry on being one of the world’s fastest growing economies and 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.