RIYADH: Qatar’s Purchasing Managers’ Index fell to 38.7 in March from 50.6 in February, signaling a sharp contraction in the non-energy private sector as regional conflict disrupted demand.
The S&P Global PMI dropped well below the 50 threshold that separates expansion from contraction, marking one of the steepest deteriorations in business conditions in recent years.
The decline was driven by a sharp fall in new business, which contracted at the fastest pace since the survey began in 2017, as companies reported delays, suspended operations and reluctance among clients and investors to commit to new projects.
The slowdown in Qatar’s non-energy sector growth is occurring against the backdrop of rising escalation triggered by the outbreak of war between the US and Israel against Iran in late February. The conflict has severely disrupted flight operations and shipping routes, while increasing economic uncertainty throughout the Gulf region.
Across the region, PMI readings were mixed, with the UAE easing to 52.9 from 55, Kuwait falling to 46.3 from 54.5, and Egypt slipping to 48 from 48.9.
Commenting on Qatar’s PMI report, Trevor Balchin, economics director at S&P Global Market Intelligence, said: “The PMI data for March flagged an immediate impact of the outbreak of war in the Middle East on the Qatari non-energy economy. The PMI sank to its lowest level since the initial phase of the pandemic in 2020, highlighting the scale of disruption from hostilities in the region.”
He added that the headline figure was heavily weighed down by a survey-record drop in new business, with companies reporting major disruption leading to delays, suspended operations and a general reluctance among clients and investors to commit to new contracts.
According to the report, output continued to fall for the fourth consecutive month in March, at a much steeper pace.
The ongoing Middle East war has significantly worsened the year-ahead outlook, with 70 percent of Qatari non-energy firms expecting output to decline over the next 12 months.
Respondents overwhelmingly pointed to regional instability as the primary reason for their pessimism.
Survey participants revealed that a prolonged war would lead to worsening market conditions, weaker investor confidence, and a slowdown in activity, especially in the real estate sector.
Many Qatari non-oil companies expect a recession or economic downturn if the conflict continues, while others expressed concerns over the potential damage to development projects and the tourism sector.
“The hiatus in new work led to a steep drop in output and marked pessimism regarding the next 12 months, with 70 percent of companies expecting output to contract,” said Balchin.
He added: “But firms also noted that it was too early to assess near-term recovery prospects or the longer-term business outlook. April PMI survey data released in early-May will provide one of the earliest macroeconomic signals on the Qatari economy in the second quarter of 2026.”
In line with sharply lower output and new work, companies reduced their purchasing activity at the fastest rate since June 2020.
Lower input volumes were attributed to weaker business activity and cautious inventory management. Stocks of inputs fell at the steepest rate since November 2022.
