MIDDLE EAST | MARKET INSIGHT
MENA – Industrial construction project pipeline Project type ($M) Manufacturing plants Chemical and pharmaceutical plants
Waste processing plants Metal and material production and processing plants
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
40-foot container from Shanghai to Rotterdam rose 19% in the week to 13 March, reaching $2,443 – the largest weekly increase since June 2025. Rates from Shanghai to Genoa climbed nearly 10% over the same period.
Macroeconomic and investment implications The conflict also has important macroeconomic implications for the construction sector. A sustained rise in energy prices will add to global inflationary pressures, complicating the outlook for monetary policy. With central banks around the world already weighing policy decisions, many are likely to adopt a more cautious stance. Some may delay rate cuts, while others could even consider tightening further if inflation accelerates.
The risk of stagflation – weak growth combined with rising prices – is becoming increasingly pronounced. The Federal Reserve, European Central Bank and Bank of England are, therefore, likely to keep interest rates higher for longer, particularly if energy driven inflation begins to resemble the post-Ukraine price shock of 2022.
For construction, this would have significant consequences. Higher borrowing costs would weigh on new project starts, slow planning approvals and reduce the viability of residential and commercial developments. Infrastructure projects would also face more expensive financing. Many contractors had been counting on lower interest rates to ease financial pressures in 2026. Instead, a prolonged period of restrictive monetary policy
could intensify insolvency risks, extending a trend already evident across several advanced construction markets. Emerging markets may be especially vulnerable. Infrastructure development in many of these economies depends heavily on foreign direct investment and international financing. Heightened geopolitical uncertainty could weaken investor confidence, delay project pipelines and slow broader economic development.
Regional outlook The impact of the conflict will vary significantly by region. Construction markets in the Middle East face the most immediate disruption due to their proximity to the conflict and reliance on regional shipping routes. In Europe and North
Construction markets in the Middle East face the most immediate disruption due to their proximity to the conflict.
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