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ANALYSIS
Economics
The Growing Influence of the GCC
MIDDLE EAST
David Clifton, regional director – Faithful + Gould, an SNC-Lavalin Company, looks at how current regional geopolitics will impact the UAE economy and how that will affect the country’s real estate and construction landscape August 2022 | MEConstructionNews.com
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ith UAE and KSA the only nations that can realistically up production in the OPEC and OPEC+ group, what does that mean for their economies post the Arab summit attended by them, Joe Biden, and the leaders of Egypt and Jordan? We know that KSA’s maximum output is circa 13 million barrels per day (bpd) and UAE c.3.7 million bpd and they are currently producing at a level of 11.4 million and 3.2 million respectively. This is a lower level from KSA, as it can typically deliver 12.4 million bpd (in line with OPEC+ agreements). With $732 million and $185 million per day as extra revenues since the oil price spike, the questions remain, why pump more? What is in it for these countries, and what do they get in return? Looking at local and regional issues, we see that in recent years, both the UAE
and Saudi Arabia are politically becoming incrementally more powerful globally. The UAE in particular is very well placed to maximise not just its influence, but also its view that post-pandemic infrastructure stimulus and direct economic investment will drive the current economy and encourage future economic growth. When we look at the development and construction sector, we can see that whilst the anecdote of all roads lead to Saudi Arabia that has existed in the last five years is broadly true, we are seeing a trickle-back effect to the UAE, primarily Abu Dhabi. There is a significant pipeline of opportunity within the Emirate that is being developed by government and sovereign wealth fund (SWF) derived investments. This has great potential to start the recovery for the industry. Although it should still be added that UAE is still a place where we have too many contractors and not enough work,
Driving growth The UAE, and Abu Dhabi in particular, believes that post-pandemic infrastructure stimulus and direct investment will drive future economic growth.
3.7m Current number of barrels being produced by UAE per day
