Austerity has hit the region’s construction sector hard. Ever since oil prices fell in late 2014, governments have reined in their budgets and cut capital expenditure. For construction companies, this has resulted in reduced spending on new projects, late payments and unpaid variations on existing schemes.

The period of austerity now appears to be coming to a close. Oil prices are comfortably above $70 a barrel and, after three years of limited activity on new projects, some governments are beginning to ramp up spending to drive broader economic growth.

Abu Dhabi is the best example. Crown Prince Mohammed bin Zayed al-Nahyan approved a AED50bn ($13.6bn) economic stimulus package and ordered the settlement of payments to private sector suppliers in June. Since then, government agencies and other related client bodies have moved ahead swiftly with new projects.

There is also growing pressure to make progress on projects in Saudi Arabia, Dubai and Bahrain, where spending has been relatively high in recent years. The commitment to forge ahead with new projects is expected to continue.

The drive to spend is undoubtedly positive for the construction sector, but the impact may be undermined if client bodies continue to aggressively screw down costs. This is a real possibility as, although there is now a commitment to spend, there will be pressure to make sure those funds are deployed efficiently. Traditionally that means securing low prices for a large volume of work.

While that may achieve the objective of a certain project or agency, in some ways it contradicts the ultimate economic aims of stimulus spending.

The aim of expansionary fiscal policy is to boost spending by companies and consumers by putting more money into the market. If that money comes with the caveat of being spent cheaply, then those companies and consumers may well be employed, but cost pressures will mean their spending, together with the full potential impact of the stimulus, will be curtailed.