What's happened
S&P Global PMI data indicate Kuwait’s non-energy sector is contracting while Qatar shows signs of stabilization, as Saudi Arabia’s non-oil economy strengthens despite export weakness and Russia faces modest manufacturing growth. The stories highlight diverging fortunes across Gulf states and the broader impact of regional tensions.
What's behind the headline?
Key takeaways
- Kuwait: PMI at 46.4 (June) signals contraction; new orders down and backlogs persist, driven by regional conflict and higher input costs. Employment falls; inventories shrink at a record pace. The market is cautious about future conditions.
- Qatar: PMI at 47.6 (June) signals continued deterioration but with a slower pace; output stabilizes and construction activity rebounds. The outlook improves on expectations of regional peace and demand recovery.
- Saudi Arabia: PMI at 53.3 (June) indicates solid expansion in the non-oil sector, supported by domestic demand and project activity. Exports remain weak, but local demand offsets external headwinds. Optimism about future output is rising.
- Russia: PMI at 50.3 (June) marks a return to growth but with weak export demand and job cuts. Inventories and purchasing activity are rising as firms prepare for orders, but confidence remains subdued.
Implications
- Regional tensions are creating uneven growth patterns across Gulf economies. Domestic demand is cushioning Saudi growth, while Kuwait and Qatar face export and external demand headwinds.
- Supply chains are shifting toward local sourcing in Saudi Arabia, potentially easing some inflation pressures but risking higher costs in the short term.
- Investors will watch for signs of geopolitical rapprochements, particularly US-Iran dynamics, which could unlock more stable market conditions.
How we got here
PMI surveys track activity in private sectors across economies. Kuwait's non-energy private sector has contracted for a fourth straight month, while Qatar’s non-energy sector shows signs of stabilizing. Saudi Arabia’s non-oil economy remains resilient as Vision 2030 gains momentum, though exports continue to lag. Russia’s manufacturing sector displays a modest rebound in June, with export demand remaining weak. These trends come as regional tensions and geopolitical dynamics influence demand, supply chains, and inflation pressures.
Our analysis
Arab News reports on Kuwait, Qatar, and Saudi PMI data, plus The Moscow Times coverage of Russia's PMI. Trevor Balchin and Naif Al-Ghaith provide expert commentary on near-term outlooks. These sources collectively illustrate divergent trajectories within regional economies amid ongoing geopolitical tensions.
Go deeper
- How are Gulf economies adjusting to continued export weakness?
- What具体 steps is Saudi Arabia taking to support non-oil growth beyond domestic demand?
- Will regional peace talks influence PMI readings in subsequent quarters?