The construction sector in the Middle East and North Africa (Mena) region will face a downturn in 2020 over soaring Covid-19 cases in the region and slump in oil prices, according to leading data and analytics company GlobalData.

 

The construction output growth forecast has been revised to -0.8 per cent, down from the previous projection of 1.4 per cent in mid-March (and 4.6 per cent in its Q4 2019 update), it stated.

 

Yasmine Ghozzi, Economist at GlobalData, said: "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."

 

"Although an historic agreement on production cuts was reached on April 12 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," stated Ghozzi.

 

While Saudi Arabia is still maintaining its renewable energy programme 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.

 

Ghozzi said: "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."

 

"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," he added.

 

Ghozzi pointed out that in North Africa, the outbreak threatens to devastate Egypt’s $12.5 billion-a-year tourism industry, which accounts for 12 per cent of GDP. 

 

"It 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," he added.-TradeArabia News Service