Week Ahead Economic Preview: Week of 23 March 2026

The following is an extract from S&P Global Market Intelligence's latest Week Ahead Economic Preview. For the full report, please click on the 'Download Full Report' link.

Flash PMI business surveys to reveal initial Middle East war impact

The week ahead sees flash PMI data released for the world’s major developed economies as well as India. The PMIs are accompanied by inflation data for the UK and Japan, as well as consumer confidence data in the eurozone and US. While UK retail sales and industrial production in Japan are other highlights, though markets will be more interested in the forward-looking survey data. Interest rate decisions are meanwhile awaited from Norway and Mexico.

The March flash Purchasing Managers’ Index (PMI) data provide the first insights into how businesses around the world have been affected by the outbreak of war in the Middle East (the February PMI data had been collected just prior to the first US-Israeli attacks on Iran).

Front of mind is the impact of the war on inflation. Higher energy prices feed through to the economy very quickly via higher transport and fuel costs, but the PMIs will be eyed for not just how much costs have risen, but also the extent to which firms are passing these higher costs onto customers. This is especially important in the US and UK, where inflation is already running ahead of central bank targets, as well as in the eurozone, with policymakers in all three central banks having taken a hawkish turn in response to the war. We have already seen Australia react to the energy price spike with a rate increase and markets are starting to price in more rate hikes from other major central banks as expectations shift from anticipating a brief war to envisaging a more protracted and disruptive conflict in the Middle East.

However, central banks will also need to consider downturn risks from the war, meaning clues will also be sought from the PMIs for the impact of on demand and business confidence to gauge the potential economic impact. Geopolitical uncertainty was already dampening demand, investment and employment before the war, so markets will be eager to see the extent to which recent events are reported to have further impacted business confidence, activity, order books, export trade and hiring.

Indications of the war’s impact on supply chains will also be eagerly assessed. Fuel shortages, container issues and any delays to shipments via the Strait of Hormuz de facto closure will be gauged through the PMI’s Supplier Delivery Times Index. This index was the key supply chain measure tracked during the pandemic and feeds into most central bank supply models. Longer supplier lead times mean production constraints and higher prices.

Awaiting flash PMI data for March

In the US, a weak Q4 GDP reading was due in part to the shutdown, but the PMI has been trending lower and prices rising prior to the war, both widely blamed on tariffs.

In the UK, the PMI had been signalling an upturn in business activity, but the war has already been seen to have dented consumer confidence to bode ill for any hopes of stronger economic growth.

The eurozone seems especially prone to the impact of the war due to its geographical proximity and exposure to fuel shipping, meaning the conflict threatens a nascent manufacturing-led recovery that had been evident in the PMIs so far this year.

While not geographically close, Japan has a large oil dependency on the Middle East which means the war poses both an inflationary shock and a supply squeeze. This comes at a time when the PMI was signaling an improving economic climate for Japan.

Read more about recent global PMI trends here.