The GCC projects market experienced a slowdown in Q1 as a direct consequence of the regional instability with the total value of contracts awarded across the GCC region plunging by 9.7% y-o-y to hit $61.2 billion compared to $67.8 billion the previous year, said Kamco Invest, a regional non-banking financial powerhouse, in its report citing MEED data.

According to the report, this contraction was driven largely by a substantial downturn in contract awards within Saudi Arabia and the UAE, which represent the two largest projects markets in the region. In contrast, Kuwait, Oman, and Qatar recorded growth in project awards during the same period. 

According to MEED Projects, the number of contract awards in the GCC region fell from 84 in January-2026 and 80 in February-2026 to just 25 in March-2026, with the corresponding value of contract awards similarly dropping from $20.5 billion and $26 billion in January-2026 and February-2026, to only $11.8 billion in March. 

The war has already impacted many aspects of life and business in the GCC countries, including supply chain delays resulting from shipping disruptions in the Strait of Hormuz, as well as the creation of negative sentiment in some of the region's key industries, such as real estate and tourism, stated the report by Kamco Invest. 

Energy exports serve as the primary revenue generators for the GCC countries; consequently, any disruption in the production and export of oil and gas will have a significant negative impact on the ability of GCC countries to fund projects. Already, the closure of the Strait of Hormuz and attacks on energy infrastructure have resulted in sharp increases in oil prices and the cessation of production in several hydrocarbon-producing complexes. 

The Saudi Arabia awards contracted by 51.1% y-o-y, falling to $11 billion in Q1 from $22.5 billion in Q1-2025. Conversely, aggregate project awards in Kuwait jumped more than five-fold to reach $8.1 billion, compared to $1.5 billion in the prior-year quarter. 

Meanwhile, the UAE saw contract awards decline by 18.5% y-o-y in Q1-2026, reaching $29.2 billion, down from $35.8 billion. Looking forward, GCC project activity is anticipated to witness sluggish momentum in 2026, weighed down by the destabilizing repercussions of the US-Iran conflict for the region as well as for the global economy. 

In its latest Regional Economic Outlook report, the IMF has revised down its projected GDP growth for the global economy by 230 basis points to 2.0% for 2026, and by 260 basis points for the Middle East and North Africa real GDP to 1.1%. In context, the IMF downgraded all real GDP projections for GCC countries with Qatar witnessing the highest downgrade in 2026. 

The apparently expected economic growth slowdown for the Mena and GCC countries is expected to have an adverse impact on the funding of contract awards during the year, cautioned Kamco Invest in its report. 

On the other hand, economic activity for 2027 is expected to witness moderate growth during the upcoming year, and hence a bounce-back in contract awards is projected for 2027, it added.-TradeArabia News Service