For a moment it felt like 2007 again when reading the English language press in the UAE on 24 January.
Abu Dhabi’s Executive Council boldly announced that it had approved billions of dollars of construction schemes, including new airport terminals, metros, hospitals and museums.
The enthusiasm was short-lived. Speaking to construction companies in Abu Dhabi that day, it quickly became apparent that despite the announcements, few expect the market to change dramatically in 2012.
Although many are reassured by the government backing of projects, most say awards will remain slow, as firms slowly accept that the UAE is no longer the growth market it once was.
It is not just construction that is being forced to accept this new reality. Gross domestic product growth is expected to drop to 3 per cent in 2012, from 4.3 per cent in 2011. Although this is much better than the 3.5 per cent contraction of 2009 and is still buoyant when compared to most other markets, it is still less growth than companies in the UAE are used to.
Tougher trading conditions mean firms will have to streamline their operations to survive. Management teams are being replaced and organisations restructured. If these transformations are successful then businesses will learn that 3 per cent growth is enough.
If they do not, they will always have to rely on government largesse to survive.