What we’re keeping an eye on as we head into the break

We send you off into Eid vacation no clearer about when the war might end than when the week started, but from Abu Dhabi to Cairo, there’s a sense that we’re all going to need to come back from the break ready for this to grind on a while longer. Among the stories we’ll be keeping an eye on over the break:

#1- Saudi construction contracts last year collapsed to less than half of 2024 levels — and PIF budget cuts are only part of the story, industry data suggests. The value of construction contracts issued across the kingdom in 2025 fell below USD 30 bn, less than half the prior year's total. The contraction was driven by Public Investment Fund budget cuts and a wholesale reprioritization of the gigaproject portfolio. The question now: Will the war give Riyadh further cover to pull back even more, prioritizing the World Cup and Expo buildouts over other projects?

#2- Egypt, Jordan, Lebanon, and Tunisia are among the emerging markets in the region that could be getting a financial lifeline from EBRD. The development bank is looking at emergency support measures to help shield vulnerable countries from the external shock of the ongoing regional war.

All four are particularly vulnerable: Egypt and Jordan could be facing a drop in remittances from expats in the Gulf, while both countries and Lebanon are also expected to see disruptions in tourism-based businesses. Meanwhile, a handful of other countries — including Tunisia — are exposed to being delayed, canceled, or otherwise face hurdles as a result of higher financing and energy costs.

#3- It’s interest rate week around the world: The Fed will make its interest rate announcement today — and Thursday is equally big a day, with the ECB, Bank of England, and Bank of Japan doing the same. Central banks in China, Canada, Australia, Brazil, Sweden, and Switzerland are also meeting this week to set rates.

The Fed is widely expected to keep rates unchanged as it takes stock of the economic fallout from the war. Policy decisions moving forward might prove tricky. The war’s pressure on oil prices threatens to spike inflation, while the US labor market is also looking weak, so the case for looser vs. tighter economic policy might be much less clear than before.

Sign of the times

European defense startups could be the Gulf’s best bet for cost-effective drone interception — and the match works both ways. The UAE alone has burned through hundreds of Patriot interceptors since the war began, each costing USD 4 mn to down a USD 35k Iranian Shahed drone. With a global missile shortage compounding the cost asymmetry, Gulf buyers are hunting for alternatives — and cash-strapped European defense startups building next-gen counter-drone systems need exactly what the Gulf offers: urgency, funding, and a live theater to prove their tech.

Regional leaders are increasingly diversifying their weapons arsenals, supplementing US hardware with technology from Europe, South Korea, China, Turkey, and Russia, Nicholas Heras, senior analyst and program head for the State Resilience and Fragility Program at the New Lines Institute for Strategy and Policy, tells EnterpriseAM. But top-tier US hardware will always be at the head of the region’s shopping list, he adds.