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RIYADH: Non-oil business activity in the Middle East showed mixed trends in July, with Kuwait, the UAE, and Qatar maintaining growth, while Egypt demonstrated signs of recovery and Lebanon remained under pressure.

According to the latest Purchasing Managers’ Index report released by S&P Global, Kuwait’s PMI ticked up to 53.5 in July from 53.1 in June, signalling a solid monthly improvement in the health of the non-oil private sector. 

This robust performance of non-energy business conditions in Kuwait aligns with the wider trend observed in the Gulf Cooperation Council region, where countries are pursuing economic diversification efforts to reduce dependence on crude revenues. 

“Kuwait’s non-oil private sector began the second half of 2025 in much the same way as it ended the first, with output and new orders up markedly again in July,” said Andrew Harker, economics director at S&P Global Market Intelligence. 

Survey panelists linked higher new orders in July to advertising efforts and price discounting, which helped to further raise the output. 

According to the report, employment levels in Kuwait’s non-oil sector remained broadly unchanged in July, following a record increase in June. 

S&P Global added that inflationary pressures softened in the seventh month of the year, with purchase prices and staff costs increasing at the slowest rates in six and four months, respectively.

“Firms will have been cheered by a softening of inflationary pressures during the month, but the reluctance to hire extra staff did mean that backlogs of work accumulated again,” said Harker. 

The survey data also revealed that Kuwaiti companies remained strongly optimistic about future growth, on the hopes that output will rise further in the remaining months of the year. 

“The prospects for further expansions in new business in the months ahead appear bright, and we’ll hopefully see this reflected in renewed hiring activity soon,” added Harker. 

UAE’s PMI declines amid geopolitical tensions

UAE’s PMI slipped to 52.9 in July from 53.5 in June but remained well above the 50 mark that signals expansion of the non-energy business conditions. 

S&P Global attributed this decline to a slowdown in new business growth across the non-oil economy, as ongoing regional tensions made some clients hesitant to commit to new spending.

Panelists who took part in the survey also pointed to weaker tourism activity and headwinds from global trade disruptions to lower activities in July. 

Despite this decline, output expanded sharply in June, as non-oil firms in the Emirates sought to prevent further increases in backlogs of work.

“Business conditions improved in July, but the rate of growth was the weakest since the middle of 2021. As has been the case recently, output was supported by positive demand trends,” said David Owen, senior economist at S&P Global Market Intelligence. 

He added: “New order volumes helped firms to expand, but this trend is declining, with the latest data indicating the softest rise in incoming new work in almost four years.” 

The softer increase in new orders contributed to a slight easing in the rate of activity expansion in July, which was further dampened by intensified competitive pressures

The report also revealed that some firms reported that output increased in response to new sales opportunities, rising client incomes, advancements in technological investment, and the clearance of pending work.

The July survey data indicated that job growth softened in over the month, marking the weakest uplift in four months. 

“Should regional tensions ease, we may see a recovery in sales growth in the coming months. This would also be supported by the subdued price environment, with input costs rising only modestly despite the pace of increase reaching a three-month high,” said Owen. 

He added: “Nevertheless, the ongoing trends of rising competition, limited inventory, constrained hiring growth and relatively low confidence among surveyed firms suggest that downside risks remain elevated.” 

In the same report, S&P Global revealed that Dubai’s PMI rose to 53.5, up from a 45-month low of 51.8 in June, signalling a solid upturn in operating conditions across the Emirate’s non-oil private sector economy.

Dubai non-oil firms also expanded their output at the sharpest rate in five months in July, while continuing efforts to increase employment and inventories.

Non-energy business conditions improve in Qatar

In a separate report, S&P Global revealed that business conditions in Qatar’s non-energy sector continued to improve in July, with the country’s PMI remaining above the 50-expansion zone for the 19th consecutive month. 

The country’s PMI fell to 51.4 in July from 52 in June.

The report revealed that non-energy private sector employment in Qatar increased at the second-strongest rate in the eight-year survey history, driving a further sharp increase in wages.

“The PMI remained above the neutral threshold at 51.4 in July, signalling sustained overall growth in the non-energy private sector. But the headline figure continues to mask underlying weakness in demand and output, being heavily supported by another round of strong employment growth,” said Trevor Balchin, economics director at S&P Global Market Intelligence. 

Companies in the non-energy private sector remained optimistic regarding the 12-month outlook for activity in July, due to expected growth in investment, tourism, and industrial development, as well as a recovery in construction, population expansion, and government initiatives. 

Egypt’s PMI nearing growth trajectory 

In another report, S&P Global revealed that Egypt’s PMI increased to 49.5 in July, up from 48.8 in June, but still remaining below the 50 no-change threshold for the fifth consecutive month. 

According to S&P Global, Egyptian non-oil business conditions deteriorated for the fifth consecutive month in July, although the decline was less severe than in June, with firms reporting softer contractions in both activity and new orders.

The report added that businesses increased headcounts for the first time since last October, while cuts in purchases softened. 

“Although the Egypt PMI stayed below 50 in July, indicating a worsening of non-oil business conditions, the latest survey data provided some cause for optimism. Several firms reported the securing of new work, which helped to soften the rate of decline in sales,” said Owen. 

He added: “Businesses also had the confidence to hire new staff, leading to an increase in employment for the first time in nine months, if only a fractional one.”

Input prices also rose at a slightly quicker pace in July, with survey panelists attributing this trend to higher costs for items such as cement, fuel and packaging. Increased staff wages also contributed to cost pressures, although the rate of growth was mild. 

Regarding future activity, companies in Egypt continued to express concerns about demand strength and broader economic uncertainty, with optimism improving slightly from June’s record low. 

Lebanon’s PMI drops 

According to the latest report, Lebanon’s private sector economy remained under pressure at the start of the second half of the year, with the PMI in July dropping to 48.9 from 49.2 in June. 

The report revealed that business activity volumes across Lebanon’s private sector fell further in July, extending the current sequence of contraction to five months, driven by subdued demand conditions, particularly from abroad.

“The July 2025 BLOM Lebanon PMI dropped to 48.9. This result was not unexpected as the economy lacked any meaningful demand stimulus: the government does not have any money to spend and the private sector is not able and willing to spend,” said Ali Bolbol, chief economist and head of research at BLOMInvest BANK. 

Private sector companies in Lebanon lowered their purchasing volumes as a part of their efforts to reduce costs. 

Looking ahead, surveyed companies remained pessimistic toward the year-ahead outlook for business activity, with these firms expressing negative consequences of a potential escalation of conflict and tensions across the Middle East region. 

RIYADH: Information technology spending in the Middle East and North Africa region is forecast to reach $169 billion in 2026, marking an 8.9 percent increase from 2025, according to the latest projections from Gartner.

The surge is driven by accelerated adoption of artificial intelligence, intelligent automation, and AI-optimized infrastructure upgrades, as organizations across the region prioritize digital transformation amid global economic and geopolitical uncertainties. 

Gartner’s forecast is already taking shape in ����ֱ��, where AI adoption is surging, as seen with the launch of Humain, a state-backed AI company unveiled in May by the Public Investment Fund.

Positioned at the forefront of the Kingdom’s ambition to become a global AI hub, Humain focuses on deploying advanced AI infrastructure, developing Arabic multimodal large language models, and forging strategic partnerships with global technology leaders such as Nvidia, AMD, and Amazon Web Services. 

“The MENA region is rapidly emerging as a global tech powerhouse, with the Gulf Cooperation Council leveraging its stability, infrastructure and forward-looking policies to attract global partners and build digital skills that empower innovation and support resilient AI-driven economies,” said Mim Burt, practice vice president at Gartner. 

“Even amid global economic and geopolitical uncertainty, chief information officers in MENA are making strategic investments in AI, intelligent automation and multi-cloud strategies, while strengthening cyber defenses and advancing talent upskilling,” Burt added. 

Data center systems will remain the highest-growth segment in 2026, with spending projected to increase by 37.3 percent to $13 billion. 

However, Gartner noted that the pace will moderate compared to 2025’s 69.3 percent growth, as the market transitions from rapid buildouts to more incremental and sustained investments. 

“Data center system spending is expected to accelerate as MENA CIOs and technology leaders invest in AI-enabled software and AI-optimized infrastructure,” said Eyad Tachwali, vice president, advisory at Gartner. 

“This surge is largely fueled by pent-up demand for generative AI and advanced machine learning, which depend on robust computing power for large-scale data processing,” Tachwali added. 

“Most of this demand is being driven by governments, hyperscalers, technology providers and organizations focused on developing and deploying AI models, rather than traditional enterprises or consumers,” he noted. 

Software spending is also expected to see significant growth, rising 13.9 percent to $20.4 billion in 2026, as organizations across MENA integrate GenAI capabilities into their operations. 

Gartner projects that by 2028, 75 percent of global software spending will be directed toward solutions embedded with GenAI functionality. 

“CIOs will increasingly be offered embedded GenAI capabilities in enterprise applications, productivity and developer tools, more advanced large language models as well as AI-optimized servers to support AI-as-a-service,” said Burt. “Providers are also exploring new pricing models across software and hardware to drive revenue.” 

IT services spending in the region is projected to grow 8.3 percent in 2026, reflecting the shifting priorities as AI becomes a central component of enterprise strategies. 

“With the rapid acceleration of AI infrastructure and adoption in MENA, CIOs must move beyond GenAI as a productivity tool and embed it into the heart of their business strategy,” said Tachwali. 

“The real competitive edge will come from building strong data foundations, composable technology platforms and cultivating AI-fluent talent — core enablers for unlocking differentiated value from AI,” he added. 

Initiatives in this field across the region include those contained in ����ֱ��’s broader Vision 2030 strategy, under which the Saudi Data and AI Authority is spearheading nationwide efforts to embed AI across economic sectors and elevate the country’s competitiveness. 

Similarly, the UAE continues to reinforce its leadership in the sector with its UAE AI Strategy 2031, which aims to position the nation among the top AI-driven economies worldwide. 

The UAE’s partnership with OpenAI under the Stargate UAE initiative will establish a 5-gigawatt AI campus in Abu Dhabi, providing nationwide ChatGPT access and positioning the country as a regional AI hub with global-scale compute infrastructure.