Nicosia, Apr.5 :- - The estimated cost of projects planned in the countries of the Gulf Cooperation Council (GCC) has for the first time broken the two trillion dollar barrier.
If the majority of these projects are executed, the formerly sleepy oil rich region will become a global powerhouse. What is not certain, however, is whether the fast rate of project execution will be sustainable.
The four biggest projects planned in the GCC are the City of Silk in Kuwait which is expected to cost 77 billion dollars, followed by the Bawadi roject in the United Arab Emirates at a cost of 55 dollars, while the Sudair Industrial City in Saudi Arabia and the Yas Island Project in the UAE are expected to cost 40 billion dollars each.
The two trillion dollar event is an important watershed, marking not only a significant milestone in the development of the Gulf, but also demonstrating that the regional boom is far from over. The figure is more than double the combined gross domestic product of the six GCC economies.
It should be noted that the driving force of this momentum is the construction sector, comprising airports and sea ports, roads, rail, real estate and general civil engineering work. Construction accounts for more than 1.17 trillion dollars of the total.
Rising costs of building materials, a general lack of contracting capacity and a shortage of skilled and unskilled labour are factors which could slow down the momentum. For example, a ton of steel today costs 4,000 dollars, compared with 2,000 dollars four months ago.
Aggregate in Qatar now costs three times as much as it did five years ago. There is a severe shortage of cement across the region and the execution of many projects is slowing down, while contractors wait for materials to become available. Furthermore, the average rates for skilled labour have tripled in just three years and the rates for unskilled labour are also rising fast.