Energy, utilities and transportation forms the majority of the infrastructure investment
According to a report by lead analysts in the UAE, the energy, utilities and transportation sectors are expected to see massive growth over the next two decades with the government set to pump Dh1.3 trillion worth of investment into these sectors.
Whilst such a sizeable investment is expected to boost economic growth, it is also expected to have a massive impact on overall job creation in the country, particularly in the oil and gas, power, water and transportation sector over the next 20 years. A major proportion of this investment will come from Abu Dhabi as they look to bolster their oil and gas sector with the largest impact being associated with the extraction of natural resources such as oil and gas.
The UAE also maintains its objective of building a sustainable economy free from a dependence on oil by increasing its investment in the non-hydrocarbon sector. Although the development will cover all seven Emirates, inevitably, Dubai and Abu Dhabi will attract the bulk of the investment.
Back in May of this year, Abu Dhabi National Oil Company (Adnoc) announced its plan to invest Dh165 billion in the downstream sector. Also, the UAE is investing billions of dirhams in the transportation sector such as Etihad Rail, Dubai Metro and Hyperloop.
According to Middle East Rail, approximately $250 billion is expected to be invested in the Middle East on various railway projects over the next decade. It is estimated that in 2018 alone, spending on the 162 existing regional projects will exceed $86.7 billion.
In addition, billions of dirhams are currently being invested into the development and expansion of Al Maktoum International Airport and Abu Dhabi Airport.
The analysts go on to state that it is not only the transportation and tourism sectors which will experience significant growth, as the UAE is also heavily involved in the emergence and adoption of new technologies in line with the vision for creating a knowledge-based economy.
The report concludes by stating that the government must think logically about how they balance the need to localize manufacturing while pursuing sound economic policies. Given the relatively small size of the region, the region will undoubtedly have to import in order to build infrastructure. The UAE policymakers will have to stress the importance of economic openness and free trade given the region’s need to export.
With $1.2 trillion of roads, buildings and infrastructure projects planned across the GCC at the start of 2018, according to Research and Markets report, the region offers abundant opportunities for construction contractors, engineers, project managers and manufacturers.
In the next two decades, according to Strategy&, non-OECD states are projected to spend more than $57 trillion on infrastructure projects, compared to $34 trillion by OECD countries.
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Source: Khaleej Times