Growth can be sustained in the Gulf

28 March 2008
Reaching the $2 trillion mark for the first time is a significant watershed for the Gulf projects market. Over the past five years, the region has been reinvented by schemes that have transformed its infrastructure, its cities and the lives of the people living in them. But many wonder whether the current level of growth can be sustained.

Attracted by housing developments, improving transport links, plentiful employment and a nascent cultural scene that the projects are providing, tens of thousands of foreigners are moving to the Gulf.

The projects are crucial to the continued development of the region and its quest for economic diversity. Yet there are fears that the market is growing too fast.

Contractors claim they are unable to take on more work, qualified staff are at a premium and material prices have doubled in just two years.

The oil and gas sector is one example. Over the past year, the value of contracts awarded has fallen by two-thirds, as the lack of contractor capacity and soaring costs take their toll.

However, with oil prices at record levels, there is more than enough revenue to fund further expansion, and population growth ensures a continuing need for improved transport and utilities.

Most importantly, the region’s commitment to open up its economies remains firm. The Gulf can keep on growing, but it might have to do so at slower pace than before.

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