GCC Construction Market Trends

While the global economy remains uncertain, the GCC region is currently experiencing strong economic growth, moderate inflation, and fiscal surpluses. To further diversify and expand their economies, governments in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates are making significant investments in infrastructure. However, without effective policies for planning and managing these public investments, there is a risk that the projects may not achieve their intended goals.

Effective public investment management (PIM) involves carefully selecting the right investments and ensuring their proper implementation. This includes assessing the need for new infrastructure, aligning investment projects with national and sectoral strategies, promoting effective coordination between government entities, and managing risks appropriately.

According to the International Monetary Fund (IMF), inefficiencies in PIM processes result in an average loss of about 30% of returns on investments for countries. In the GCC, these inefficiencies include non-standardized evaluation processes for proposed investments, mismatched funding and budget allocations, limited coordination between agencies, inadequate evaluations after investments are made, and insufficient performance data and reporting.

One way to evaluate the efficiency of public investments is by comparing the quality of infrastructure to a country's per capita capital stock. Although GCC countries have a high level of capital stock per capita and rank in the top quartile globally, this does not necessarily mean that the quality of their infrastructure matches the amount invested. There is still room for improvement in the region to catch up with countries that are closest to the "efficiency frontier," which represents the highest level of attainable efficiency according to the IMF's methodology.