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Wed 1 Jul 2009 06:39 AM

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Some GCC water treatment projects 'could be shelved'

Study shows slowdown in Gulf market amid global crisis but 2010 pick-up seen.

Some GCC water treatment projects 'could be shelved'
SLOW FLOW: Frost & Sullivan says some water treatment projects in the GCC region could be shelved as a result of the global slowdown. (Getty Images)

The market for water and wastewater treatment equipment in GCC has slowed during the global financial crisis with some projects likely to be postponed, a new report has said.

While Gulf nations experienced rapid growth during 2008 driven by huge investments in infrastructure, real estate, petrochemicals, oil and gas and other sectors, the impact of the crisis has "changed the business climate and there was a considerable decline in demand for most commodities", according to Frost & Sullivan.

The company said the decline in crude oil prices made investors wary of funding new projects.

In its latest report Analysis of the Middle East (GCC) Water and Wastewater Treatment Equipment Market, it says that market earned revenues of more than $1.26bn during 2008 and estimates this to reach $1.87bn in 2013.

"It is estimated that some of the downstream and upstream investments, which were planned considering crude oil price of more than $85 per barrel, are likely to be shelved," added Frost & Sullivan senior research analyst Vivek Gautam.

"This sudden change in the business landscape has stalled market progression, but with strong economic fundamentals and increased governmental expenditure, the GCC market is expected to be back on the rails by 2010."

The report adds that governments in the GCC have exhibited strong political will to continue investing in important infrastructure projects.

Environmental and health hazards related to the disposal of untreated effluent, marine pollution, and deteriorating ground water quality are some of the issues that are keeping market prospects alive.  Although these have been overshadowed by short-term concerns they are expected to positively impact market dynamics from 2009 to 2013, the report adds.

"The market is fraught with challenges in spite of its immense opportunities," added Gautam. "The complex business environment, slow decision making process, and customer preference for low cost solutions regardless of the performance makes it difficult to penetrate the market."

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