Ontario Construction News staff writer
GlobalData says it has cut further its construction output growth forecast for the Middle East and North Africa (MENA) region for 2020 to -0.8%, down from the previous projection of 1.4% in mid-March (and 4.6% in its Q4 2019 update) in light of soaring COVID-19 cases in the region and the slump in oil prices.
“Oil and gas dependent countries will face funding challenges given the decline in oil prices, which will have a negative impact on investment in major public-funded development projects,” Yasmine Ghozzi, an economist at the data and analytics business, said in a statement. “Although an historic agreement on production cuts was reached on April 12th between OPEC members and the group’s major oil producing allies to cut production by 9.7 million barrel per day, oil prices are set to remain at low levels given the severe decline in global demand.”
While Saudi Arabia is still maintaining its renewable energy program impetus and Aramco is issuing tenders for offshore construction works, other parts of the GCC, including Qatar, Oman and Kuwait, are revising their spending and their construction pipelines.
“Dubai’s Department of Finance has also ordered a 50 per cent cut in capital spending and has called for a freeze on new public construction schemes,” Ghozzi writes. “Outside the GCC, the Iraqi Government announced that COVID-19 pandemic constitutes a force majeure for all projects and contracts, creating uncertainty in Iraq’s construction sector.
“In North Africa, the outbreak threatens to devastate Egypt’s US$12.5 billion-a-year tourism industry, which accounts for 12 per cent of GDP, and will likely have a severe impact on the commercial buildings works, as investment plans in the hospitality sector are expected to be halted, if not canceled outright.”