Weakened by the recent steep oil price decline, Saudi Arabia declared it must “extremely reduce” budget expenditures and thus slashed operational and capital spending by $26.6 billion, according to a May 11 statement by Finance Minister Mohammed al-Jadaan. 

Crown Prince Mohammed bin Salman’s programs and reforms to pivot the economy away from hydrocarbon revenues will suffer significant cuts. NEOM, a proposed $500 billion futuristic city on the Red Sea coast, might see project implementation “stretched out over a longer period,” said Ali Shihabi, a member of the NEOM advisory board. 

Global Data says the diversification drive led by the kingdom will be “severely disrupted” in the short to medium term. Across the region, several economic diversification megaprojects will also take a hit. “At the very least, many are likely to scaled back,” said Jason Tuvey, a senior emerging markets economist at Capital Economics.

As of early 2020, Gulf’s real estate megaprojects represented close to $1 trillion of investment, including Vision 2030 in Saudi Arabia, Silk City (a new metropolis in Kuwait), Lusail City and stadiums for the 2022 World Cup soccer tournament in Qatar, Duqm Port in Oman and so forth.