Middle East construction gains momentum despite supply chain disruption and rising construction costs

While hopes of the pandemic ending were premature, 2021 nevertheless marked the year of economic recovery. The Middle Eastern economies rebounded during 2021 and into 2022, led by a surge in energy prices in Saudi Arabia as global demand for oil and natural gas increased strongly, and widespread air travel returned. The rising cost of oil per barrel has helped create more liquidity for the sovereign wealth funds driving nation-building programmes across the region.

Globally, inflation is one of the leading economic issues on the minds of economists, policymakers, businesses, and the general public at the moment. Inflation rates in the Middle East, however, remain stable. In May 2022, the inflation rate in Qatar had fallen to 4.7 percent year-on-year, while in the UAE, it was 2.5 percent, and in Saudi Arabia, only 2.3 percent.

UAE construction activity showed an upward trajectory in 2022, and construction costs remain benign. Still, we can expect ongoing fluctuation in the construction costs as global supply chain friction remains a concern.