Saudi Arabia and Egypt PMI readings both weakened, showing that the Middle East conflict is starting to slow the real economy
📉 March PMI data showed Saudi Arabia’s non-oil private sector dropping sharply to 48.3 from 56.1, the first move below the 50 threshold since 2020. This is a notable signal because the contraction is now appearing in an economy that had been seen as better cushioned by high oil prices and strong public spending.
🌍 In Egypt, PMI also fell to 48.0 from 48.9, the lowest level in nearly two years. New orders and output both weakened clearly, while input costs rose sharply due to fuel prices, commodity costs, and pressure from a stronger US dollar.
⚠️ The common theme across both markets is that the Middle East conflict is making customers more cautious, disrupting supply chains, and putting direct pressure on business activity. This suggests the impact of the conflict is no longer limited to oil, but is now spreading into real demand and business sentiment.
🧭 If regional tensions continue into Q2, pressure on Saudi Arabia’s non-oil growth and Egypt’s inflation risks will likely remain in place.