The value of construction projects awarded this year in Qatar is forecast to fall by about $8 billion in the coming year as Gulf states reduce spending amid falling global oil prices, according to a report by a Dubai-based business intelligence firm.
The Middle East Economic Digest (MEED) has said that there will be a 15 percent drop in the total value of contacts awarded across all GCC states through 2016, the National reported.
This means new construction and infrastructure spending in the region is set to be $140 billion – down from $165 billion last year.
In percentage terms, Qatar’s new construction spending this year is forecast to fall the most. According to MEED, the country is expected to spend around $22.2 billion in the next 12 months on fresh contracts – three quarters of the $30 billion it spent last year.
One of the main reasons for the tighter government spending in Qatar is falling oil prices and a forecasted budget deficit.
However, at $30 billion, 2015 was also a record year for Qatar in terms of construction expenditure.
According to MEED, Saudi Arabia is set to see the biggest loss in terms of the monetary value of contracts.
It is forecast to have a drop of 20 percent ($10 billion) to $40.7 billion, while Kuwait is predicted to cut the contracts it awards by 23 percent, to $24. 3 billion – a significant reduction from its all-time high of more than $31 billion in spending last year.
Meanwhile, ongoing investment in transport and infrastructure in Dubai, along with long-term oil and gas projects in Abu Dhabi, are contributing to a much smaller forecast spending drop in the UAE.
Contracts awarded there this year are expected to fall by just 2.4 percent, or less than $1 billion, to $36.5 billion, MEED said.