Four years after the oil crash that threw the GCC projects market into deep recession, the market is at a new turning point. From a fiscal point of view, the decisions to cut oil output in order to stabilise oil markets, allied with spending cuts to protect government finances, have worked.

Oil prices have recovered and, for the most part, regional finances are robust, with deficit and debt levels well managed.

But for business, particularly for those in the major projects sector, the past four years have been a nightmare. Contract awards in the GCC have fallen to about 60 per cent of 2015 levels. And contractors have faced a cash flow crisis due to increasing payment delays. Subsidy cuts and new taxes such as VAT have increased the cost of doing business.

But as austerity has started to hurt the wider economy, with property prices dropping, falling consumer spending, and reduced tourism and travel receipts, the recovery in oil prices is triggering a return to spending by governments.

The unveiling in June of a $13.6bn stimulus spending programme by Abu Dhabi was followed in October by the signing of $14bn-worth of railway agreements in Saudi Arabia. Both the UAE and Saudi Arabia have subsequently announced plans to raise spending in 2019.

But while the spending taps have been turned on again, the conditions for business will remain tough. Investment will take time to trickle down to the market and it is likely to be the second half of 2019 before we see any real pick-up in activity.

With fears of global trade wars and rising interest rates, the recovery is fragile. The demand for efficiencies will not go away, and project clients will continue to squeeze costs. While this will curtail growth, we can at least rejoice in the first green shoots of recovery.

More from this month’s Agenda

• Main Agenda: Governments lead new era of investment
• Expert opinion: Jarmo Kotilaine, chief economist at the Bahrain Economic Development Board, on recalibrating government spending for economic development
• Infographic: Money in the bank