March construction activities held up amid Iran war shock

​Construction activities in March continued to expand, although at a slower pace, due to the increasing cost of fuel and other raw materials as tensions in the Middle East impacted a sector that was hitherto rising at a record pace.

​According to the Purchasing Managers’ Index (PMI), the sector recorded an index value of 57.1 in March, slowing sharply from 70.3 in February before the war broke out in the Middle East.

​Since the outbreak of the war, the government has raised fuel prices three times during March, as only a trickle of oil tankers could pass the Strait of Hormuz, a key maritime chokepoint that carries roughly a fifth of global oil and gas.

​“Many respondents reported a challenging operating environment, mainly due to limited availability of fuel and raw materials, rising costs, and logistical bottlenecks stemming from the conflict in the Middle East,” the statement from the Central Bank said.

​The Purchasing Managers’ Index is a key economic indicator that gauges the dynamism of activities in a given sector, such as manufacturing, services, or construction. An index value above 50.0 indicates expansion, while a value below 50.0 denotes contraction, with 50.0 reflecting a neutral level.

​Despite the war-induced challenges, the sector sustained its growth due to robust project flows.

​The reconstruction of flood- and cyclone-damaged infrastructure and ongoing private sector building projects supported the industry in March, buoyed by continued economic growth and low interest rates.