Wednesday, 29 April 2026
Project activity across the Gulf states lost pace at the start of 2026, with a combination of regional instability, disrupted energy flows and weaker economic expectations beginning to weigh on new contract awards.
Across the Gulf Cooperation Council, the total value of projects awarded in the first quarter fell to around USD 61 billion, marking a noticeable decline compared to the same period last year. The slowdown became more pronounced as the quarter progressed, with a sharp drop in both the number and value of contracts recorded in March, pointing to increasing caution among governments and developers.
The shift reflects a more challenging operating environment. Tensions in the region have affected key shipping routes and energy infrastructure, creating delays in supply chains and raising concerns about the reliability of project timelines. Given the central role of oil and gas revenues in public spending across the Gulf, any disruption to production or exports has a direct impact on the ability of governments to advance large-scale developments.
The downturn has been most visible in the region’s largest markets. Saudi Arabia recorded a steep reduction in project awards compared to a year earlier, following an already slower pace of activity in 2025 as major development programmes adjusted their timelines. In the United Arab Emirates, contract volumes also declined, although the country remained the most active market during the quarter, supported by continued investment in infrastructure and transport-related schemes.
Elsewhere in the region, activity moved in the opposite direction. Kuwait posted a strong increase in project awards, driven by investment linked to economic diversification and upgrades to core infrastructure. Qatar also reported higher volumes, largely supported by expansion in its gas sector, which continues to underpin capital spending.
Despite the uneven performance across individual markets, the broader trend points to a more cautious phase for project delivery in 2026. Slower global growth and more constrained fiscal conditions are expected to limit the pace at which new schemes move forward, particularly in sectors dependent on public funding.
At the same time, the underlying development pipeline across the Gulf remains substantial. Planned projects still run into the trillions of dollars, with construction, transport and power infrastructure expected to account for the largest share of future investment.
This suggests that while near-term activity is likely to remain subdued, the longer-term outlook has not fundamentally changed. A recovery in project awards is still anticipated once regional conditions stabilise and funding visibility improves, with 2027 seen as a potential turning point for renewed momentum.
Source: Kamco Invest
