Qatar Leads Gulf Growth as UAE Kuwait Stay Strong Lebanon Lags in June

In June 2025, business activity across the Middle East delivered a mixed message. While Qatar led regional growth and Kuwait showed resilience, Lebanon remained stuck in contraction, and the UAE’s momentum softened amid geopolitical concerns. These insights come from the latest Purchasing Managers’ Index (PMI) data by S&P Global, offering a crucial look into the health of non-oil private sectors across the region.

Kuwait: Growth Holds Despite Cooling Momentum

Kuwait’s business activity slowed slightly, with its PMI falling to 53.1 in June from 53.9 in May — a three-month low. However, the figure remains above the neutral 50 mark, suggesting continued growth in the country’s non-oil private sector. The easing in pace did not dim optimism. The International Monetary Fund and World Bank expect Kuwait’s economy to expand in 2025, with GDP growth forecast at 1.9% and 3.3%, respectively.

Andrew Harker, Economics Director at S&P Global Market Intelligence, noted that businesses are responding positively to increased workloads and future expectations. “Companies are hiring more staff to meet rising orders,” he explained. Even with record employment gains in June, many businesses still faced growing backlogs, hinting at the need for further investment in capacity.

Harker concluded, “The first half of 2025 has been successful for Kuwait’s non-oil economy. Firms appear well-positioned to grow through the rest of the year.”

UAE: Minor Gains Amid Geopolitical Tensions

The UAE’s PMI rose modestly from 53.3 in May to 53.5 in June. Although this signals expansion, the pace of new business growth dropped to a near four-year low. Regional tensions, especially the conflict between Israel and Iran, weighed heavily on client demand and supply chains.

According to David Owen, Senior Economist at S&P Global Market Intelligence, businesses in the UAE used the lull in demand to focus on clearing backlogs and stabilizing inventory levels. “Geopolitical uncertainty led to weaker orders, but companies continued to push output higher,” he said.

Interestingly, input costs rose at their slowest rate in nearly two years, allowing businesses to offer discounts. With inflation staying low, a recovery in demand may be possible if regional tensions ease. Owen noted, “Businesses still show resilience, but the road ahead depends on external developments.”

Qatar: Leading Regional Growth with Employment Surge

Qatar stood out with the strongest growth in the region. Its PMI climbed to 52 in June from 50.8 in May — marking the 18th straight month of expansion. The improvement was supported by higher output and a sharp rise in employment, even though new orders and input stock levels dipped slightly.

“This was Qatar’s best performance since March,” said Trevor Balchin, Economics Director at S&P Global. “The surge in hiring helped tackle a growing backlog of work.” He also pointed out that employment growth in June was among the fastest since the PMI survey began eight years ago.

Still, Balchin noted that Qatar’s PMI remains just below its long-term average of 52.2. “The data shows steady but modest growth,” he explained. Wage growth picked up and input price inflation eased, giving companies the ability to cut consumer prices. These trends suggest Qatar is maintaining a balanced recovery in its non-energy sector.

Lebanon: Contraction Persists, Outlook Dims

Lebanon’s economy continues to struggle. Its PMI edged up slightly to 49.2 in June from 48.9 in May, but the index remains below the 50 threshold — indicating a fourth straight month of contraction.

The country's private sector continues to face sharp challenges, including rising costs and poor consumer confidence. While employment and inventory levels held steady, business activity continued to decline, driven by weak demand and client cancellations amid escalating regional conflicts.

Fadi Osseiran, General Manager of BLOMInvest Bank, said, “The war between Israel and Iran has affected customer confidence, leading to weaker sales.” He added that purchasing costs rose at the fastest rate in eight months, with many companies passing the burden onto consumers.

Worryingly, Lebanon’s Future Output Index fell sharply. Over half of the survey respondents — 53% — expect business activity to decline further in the next 12 months. This reflects a gloomy outlook for the country’s already fragile private sector.

Looking Ahead: A Region Divided by Growth and Risk

These varied performances across the Middle East underline the region’s economic complexity. The Gulf Cooperation Council (GCC) economies remain on track for recovery, with the World Bank forecasting growth of 3.2% in 2025 and 4.5% in 2026, largely due to easing oil production cuts and stronger non-oil performance.

However, geopolitical instability — particularly the conflict involving Iran and Israel — casts a long shadow. While nations like Qatar and Kuwait are building on non-oil sector strength and employment gains, others like Lebanon are faltering due to deep-rooted structural and external issues.

The challenge for Middle Eastern economies will be to maintain stability, attract investment, and sustain non-oil growth — especially as global demand shifts and political risks remain high.

For now, the region shows resilience but remains vulnerable to disruption. As the second half of 2025 begins, governments and businesses alike will be watching global markets and regional developments closely, hoping to translate cautious optimism into lasting economic progress.