INTERVIEW: Karim Sabbagh, DarkMatter CEO — why digital security threats are key issue for governments and businesses

DarkMatter CEO Karim Sabbagh explains why digital security threats are key issue for governments and businesses. (Illustration by Luis Grañena)
Updated 08 March 2019
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INTERVIEW: Karim Sabbagh, DarkMatter CEO — why digital security threats are key issue for governments and businesses

LONDON: Cybersecurity looks like becoming the big theme of this year, and maybe for many years to come.

In a survey in January by the World Economic Forum, the threat of cyberattack was mentioned as one of the most serious global threats by business leaders; in the Middle East it was an especially worrying concern, second only to the oil price as a perceived risk.

For Karim Sabbagh, that is both a worry and a business opportunity. “The impact on economies and societies is huge. One of the challenges we have as captains of industry and as citizens is that we’re fascinated by the ability we have to digitize things in our day-to-day lives. But the sad part is that for every dollar we spend on new digital enablement, we’re not spending enough on cybersecurity,” he said last week on the sidelines of the IDEX defense exhibition in Abu Dhabi.

Sabbagh is CEO of DarkMatter, the Middle East’s home-grown digital security firm. Amid the guns, tanks and desert camouflage gear at IDEX, he explained to Arab News why we should all be taking the threat of cyberattack much more seriously, and spending a lot more money to defend against it.

“I can show you a demonstration in our booth. I can interfere with your transport network, your airport operations or your power grid. All these things aren’t fiction, they’re all for real,” he said against a backdrop of simulated warfare displays in the UAE’s big defense show.

“The people with bad intent will continue to evolve their techniques and their approaches. So the question isn’t how do I completely eliminate the known risks, but how can I prepare for threats in the future.”

The “people with bad intent” are enemy governments, industrial spies, ransom seekers, or people who “subscribe to a cause,” he said.

“From what we’ve seen … state-led attacks were the most prevalent. In private organizations, it was more about accessing data and using that data for your own commercial benefit,” he added, leaving the distinct impression he knew far more than he was willing to say publicly.

DarkMatter has been in business since 2015, the brainchild of Faisal Al-Bannai, the Emirati entrepreneur probably best known for the Axiom chain of telecom stores he has made into one of the best-known names in Middle East retail.

“He’s the single shareholder, and what he does is quite unique,” Sabbagh said. “Faisal is an entrepreneur, very driven and very passionate, with all the traits you’d like to see from entrepreneurs. He likes to see things through, and has a very long-term view.”

Sabbagh became CEO of the company last year after a stint with SES, a Luxembourg-based firm that provides satellite communications services to the US and other Western governments.

Before that, Lebanon-born Sabbagh worked for many years in the UAE and Saudi Arabia as a partner at management consulting firm Booz & Co., specializing in telecommunications and media.

He takes a broad view of the digital communications business in the five business sectors DarkMatter serves.

“How do I come up with technologies, devices and applications that can give me peace of mind that communication on these devices is secure? As we were doing work on those things, we also started engagement in areas concerning digital transformation, and questions about how the government provides new services that are digitized to all its citizens and residents,” he said.

A key part of DarkMatter’s work is the interaction of humans with technology. Sabbagh cites a recent cyber-attack in Singapore, in which the country’s medical records were accessed and compromised.

After a lengthy audit, the authorities discovered there were two main reasons. One was that on the network there were patches and fixes that weren’t done. So there was something that belonged to the realm of known vulnerability that wasn’t attended to,” he said.

“The second one was human capital. Through human intervention that attack was enabled, not by design but by accident. It boils down to technology and humans, the story of humanity since we invented fire.”

Why is the threat of cyberattack so high up the list of concerns for the Middle East? Sabbagh examined this in a work he co-authored in 2008 entitled “Oasis Economies,” which examined the social tensions created in traditional Arab societies going through the modernization process. He feels the lessons then still apply today.

“My conclusion is that as you try to liberalize economies but try to preserve the social safety net, as you try to liberalize the way people go about their daily lives while preserving the culture, you’re constantly trying to manage these tensions,” he said.

Highly digitized and progressive Arab youths live side by side with more conservative forces, he added.

Smart nations and smart business can’t be truly smart unless they secure their communications.

Karim Sabbagh, DarkMatter CEO

“In one family, even one household, you move from a very traditional way of living to the kids being astrophysicists, building probes to land on the moon. I’m not exaggerating,” he said.

“We have a highly digitized young population, not like the ageing populations of the West. These digital tools are available to them and they can be very productive, but if used inadequately they can be very harmful. So it doesn’t surprise me that the awareness around cyber threats in the region is very pronounced, and rightly so.”

These issues are especially pronounced in Saudi Arabia, which is going through the rapid transformational process of its Vision 2030 reform plan.

The modernization strategy involves the creation of a series of hi-tech hubs such as NEOM, the $500 billion megaproject involving a highly automated conurbation in the Kingdom’s northwest.

“In the old world, the industrial technology and the information technology operated in two different environments, but today there’s a big intersection between them,” Sabbagh said.

“The bigger the intersection the more efficient these businesses are, but the downside is that there’s a bigger attack surface from a cybersecurity standpoint. So the more countries such as Saudi Arabia advance their digitization processes, the more advanced they’ll become, but the downside is that the attack surface expands.”

The solution, he believes, is “defense, defense, defense” against cyberattack. “The best attack is defense,” he added.

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BIOGRAPHY

BORN

Beirut, 1963

EDUCATION

MS in Technology Management from Columbia University

DBA (Doctorate) in International Business Management from the International School of Management (Paris)

MBA and BBA from the American University of Beirut

American Century University, New Mexico, US

CAREER

Regional director for strategy, Leo Burnett Middle East

Senior vice president, Booz & Co.

CEO, DarkMatter

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Expansion of DarkMatter into Saudi Arabia is one of the priorities for later this year, moving the firm outside its UAE base and complementing existing business centers in Canada, Finland and India. “Saudi Arabia is probably one of the markets we’ll look at very closely,” he said.

One line of defense Sabbagh unveiled at IDEX was the new version of DarkMatter’s successful Katim phone, an ultra-secure and virtually indestructible mobile device that the firm is aiming at the defense, energy and government sectors.

The first version of the device was a big commercial success, but the second is designed to operate in even more hostile environments, with the promise of total data security.

“It’s designed to military standards in terms of ruggedness. Our engineers ran over it in a truck, and I wasn’t amused until they showed me a video of the phone working afterward,” he said.

“You can immerse it in water for 30 minutes and it still works. If the phone detects any attempt to try to interfere with it, either physically or via software, the data stored on it will automatically self-destruct. It’s a leap forward for us,” he added, emphasizing the “quantum resistant crypto protocols” that DarkMatter uses.

What do governments, always protective of data security, think of the new device? “The government is one of the users, as well as businesses where you have critical infrastructure being deployed,” he said.

Sabbagh summed up DarkMatter’s essential business philosophy: “Smart nations and smart business can’t be truly smart unless they can secure their communications. If they aren’t secure I can access their communications, hack them and interrupt their operations. People can give me all the smart slogans they want, but if I can hack you and interrupt your information, that’s not a very smart proposition.”

 


Closing Bell: Saudi main index slips to close at 11,882.65

Updated 03 April 2025
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Closing Bell: Saudi main index slips to close at 11,882.65

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Thursday, losing 142.40 points, or 1.18 percent, to close at 11,882.65.

The total trading turnover of the benchmark index was SR5.53 billion ($1.47 billion), as 58 stocks advanced and 184 retreated.

Similarly, the Kingdom’s parallel market Nomu lost 445.6 points, or 1.43 percent, to close at 30,640.93. This came as 27 listed stocks advanced while 67 retreated.

The MSCI Tadawul Index lost 20.19 points, or 1.32 percent, to close at 1,504.15.

The best-performing stock of the day was Fitaihi Holding Group, whose share price surged 9.65 percent to SR4.43.

Other top performers included Zamil Industrial Investment Co., whose share price rose 6.57 percent to SR38.85, as well as Mobile Telecommunication Co. Saudi Arabia, whose share price surged 4.97 percent to SR11.82.

Tabuk Agricultural Development Co. recorded the most significant drop, falling 8.58 percent to SR12.36.

Arabian Co. for Agricultural and Industrial Investment also saw its stock price fall 7.59 percent to SR53.60.

Raydan Food Co. also saw its stock price decline 7.44 percent to SR19.16.

Horizon Food Co. has announced the board resolution to transfer from Nomu to the main market and appoint Al-Istithmar Capital as a financial adviser for the transition. According to a Tadawul statement, the transfer is contingent upon approval from the Capital Market Authority in accordance with listing regulations and is subject to meeting all requirements set by the Saudi Exchange.

Horizon Food Co. ended the session at SR40, up 2.56 percent.

Emaar, The Economic City seeks to convert SR4.12 billion worth of debt owed to the Public Investment Fund into capital. 

The proposed debt conversion is one component of the company’s capital optimization plan announced in September, designed to stabilize the entity’s financial and operational positions as well as optimize its capital structure to boost its ability to move forward with its growth plans.

Emaar, The Economic City ended the session at SR14.44, down 0.28 percent.

The Saudi Stock Exchange has announced the suspension of trading in the shares of seven listed companies for one session on Thursday due to the firms’ failure to disclose their annual financial statements ending Dec. 31 within the statutory period specified in the Securities Offerings and Continuing Obligations Rules issued by the CMA Board.

From the main market, the firms include Saudi Industrial Development Co., Development Works Food Co., and National Gypsum Co., as well as Arabian Contracting Services Co. and Al Jouf Cement Co.

From the parallel market, the companies are Keir International Co. and Knowledge Net Co. 


US Tariffs: Trump imposes 10% levies on GCC countries; Syria, Iraq hit hard 

Updated 03 April 2025
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US Tariffs: Trump imposes 10% levies on GCC countries; Syria, Iraq hit hard 

  • Egypt, Morocco, Lebanon, and Sudan received same 10 percent baseline as GCC
  • Concerns raised that even baseline tariff could have ripple effects across GCC supply chains

RIYADH: Gulf Cooperation Council nations will face a 10 percent US tariff under Donald Trump’s new trade policy, aimed at addressing what he called long-standing unfair practices. 

While the GCC was spared the steepest penalties, other Arab nations were hit harder — with Syria and Iraq facing tariffs of 41 percent and 39 percent, respectively, followed by Libya at 31 percent, Algeria at 30 percent, Tunisia at 28 percent, and Jordan at 20 percent. 

Egypt, Morocco, Lebanon, and Sudan received the same 10 percent baseline as the GCC, reflecting their relatively stable trade ties with the US, particularly in oil and petrochemical exports.

Hamza Dweik, head of trading at Saxo Bank, told Arab News: “Non-energy sectors in the GCC that are most vulnerable to the new tariffs include electronics, automobiles, construction, retail, and consumer goods.”

He added: “These industries rely heavily on imported goods, and the increased costs from tariffs could lead to higher prices for consumers and reduced competitiveness in the market.”

Dweik also cautioned that the region’s financial services sector may face challenges, as heightened global uncertainty could disrupt investment flows and impact regional financial markets.

Concerns have been raised that even a baseline tariff could have ripple effects across GCC supply chains, especially in metals, chemicals, and industrial sectors. 

Dweik said that global retaliation or trade spillovers are a possibility and could indirectly affect the Gulf economies.

“The uncertainty in policy and potential for rapid changes weigh heavily on global markets, including those in the GCC. The region’s focus should be on diversifying trade relationships and strengthening ties with unaffected regions to mitigate potential losses,” he added.

Oil exempt from tariffs 

In a notable relief for Gulf exporters, the White House has confirmed that oil and gas imports will be exempt from the new tariffs. The decision — which also applies to energy imports from Canada, Mexico, and Europe — is intended to avoid disrupting US energy markets and driving up fuel prices. 

For the GCC, this exemption protects the region’s most critical export sector, as oil and gas account for over 60 percent of Saudi Arabia’s exports to the US and remain a key pillar of Gulf-US trade. 

“Given the GCC’s reliance on oil exports, any global economic slowdown caused by trade tensions has the potential to negatively impact oil prices, putting extra strain on their economies,” said Dweik, adding: “The exemption helps mitigate some of these impacts, ensuring that the primary revenue stream for these countries remains relatively stable despite the broader trade disruptions.” 

Tariffs have long been a cornerstone of Donald Trump’s economic strategy, rooted in his “America First” agenda to protect domestic industries and reduce trade deficits. 

The president reignited this approach with sweeping new import duties, arguing that unfair trade practices have disadvantaged US workers for decades. 

Countries hit hardest by the tariff hikes — including China, the EU, Australia, and Japan — have sharply criticized the move, with several already imposing retaliatory duties on US goods. The sweeping measures have raised alarms globally, fueling concerns over rising protectionism, supply chain disruptions, and the risk of a broader trade war. 

While the GCC countries are not among the hardest hit, analysts have warned that the region’s exporters may still face rising costs, supply chain disruptions, and increased trade friction — particularly in sectors such as aluminum, petrochemicals, and industrial goods. 

GCC indirect risk from US tariffs 

According to a February analysis by S&P Global Market Intelligence, countries including Saudi Arabia and the UAE — which maintain fixed exchange rates to the US dollar — are particularly vulnerable to tighter monetary conditions, as the US Federal Reserve may keep interest rates elevated to contain inflationary pressures stemming from trade disruptions. 

A stronger dollar could erode export competitiveness and weaken trade balances in these pegged economies. The report warns that sustained high US interest rates could also reduce portfolio inflows into emerging market debt, potentially triggering capital outflows and liquidity pressures — particularly in debt-stressed countries such as Egypt and Tunisia. 

Although Egypt’s position has improved through Gulf investments and an International Monetary Fund program, a prolonged US rate tightening cycle could undermine this recovery. 

Moreover, if oil prices fall amid global economic slowdowns, GCC oil exporters may be compelled to delay infrastructure spending, putting pressure on large-scale diversification programs.

Shipping giant Maersk has warned of the global ripple effects of the new US tariffs, cautioning that escalating trade tensions could disrupt supply chains and raise shipping costs worldwide. 

For the GCC region, which relies heavily on maritime trade for both oil and non-oil exports, such disruptions pose a notable risk. While Gulf oil exports to the US remain exempt, sectors like aluminum, petrochemicals, and industrial goods could be indirectly impacted by slower global demand and rising freight costs. 

Dweik noted that the GCC could potentially benefit from shifting global trade patterns — particularly if US tariffs remain focused on competitors in other regions.

Reaction of GCC equity market 

Regional equity markets in the GCC largely declined following the tariffs announcement, according to data from Bloomberg. 

Saudi Arabia’s main index, the Tadawul All-Share Index, fell by 72.78 points or 0.61 percent, while the parallel Nomu market dropped 0.77 percent at 12:20 p.m. Saudi time. The UAE saw the steepest declines, with the Abu Dhabi index sliding 2.86 percent and Dubai’s DFM index dropping 2.64 percent. 

Oman’s Muscat Stock Exchange MSX 30 Index lost 0.76 percent, Bahrain Bourse All Share Index fell 0.50 percent, and Jordan’s Amman Stock Exchange General Index declined by 1.70 percent. 

In contrast, Qatar emerged as an outlier, with all major indices showing positive movement. The Qatar Stock Exchange gained 0.46 percent, possibly reflecting investor confidence in the country’s diversified economic positioning and lower direct exposure to US trade policy risks. 

While oil exports from the region remain exempt from the new tariffs, market sentiment appears to have been weighed down by concerns over indirect impacts on key sectors such as metals, manufacturing, and industrial goods. The reaction underscores growing investor sensitivity to escalating global trade tensions and their potential spillover effects on regional economies. 

GCC actions to mitigate US tariff risks 

Although the latest US tariffs primarily target China, Mexico, and Canada, GCC exporters cannot afford to remain passive. With the US explicitly tying its trade policy to national security and reviewing all global trade deals under a “Fair and Reciprocal Plan,” Gulf-based businesses face increased exposure. 

According to PwC’s March trade advisory report, newly announced tariffs on aluminum and steel will apply across all countries — including the UAE, Bahrain, and Oman — overriding existing free trade agreements. The report also warns that duty drawbacks will no longer apply to these commodities, raising costs for GCC exporters and affecting competitiveness in the US market. 

PwC recommended that GCC companies urgently evaluate their exposure by modeling cost impacts, revisiting trade classifications, and leveraging tools like free trade zones and customs optimization strategies. 

Businesses should also strengthen trade compliance, invest in digital supply chain solutions, and explore market diversification to reduce US dependency. 

As the global trade environment shifts toward more protectionist policies, the report concludes that a “wait-and-see” approach is no longer viable for the region. 


OPEC+ to advance oil output hike plan, oil drops 

Updated 03 April 2025
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OPEC+ to advance oil output hike plan, oil drops 

LONDON/MOSCOW: Eight OPEC+ countries agreed on Thursday to advance their plan for oil output hikes by increasing oil output by 411,000 barrels per day in May, prompting oil prices to extend earlier losses. 

“This comprises the increment originally planned for May in addition to two monthly increments,” OPEC said in a statement. 

Oil, which was already down over 4 percent on US President Donald Trump’s announcement of tariffs on trading partners, extended declines after the OPEC statement, with Brent crude dropping over 5 percent toward $71 a barrel.  


Saudi drilling firm ADES enters Brazil with $85.1m charter agreement

Updated 03 April 2025
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Saudi drilling firm ADES enters Brazil with $85.1m charter agreement

RIYADH: Saudi exploration service provider ADES Holding Co. has entered the Brazilian market through an $85.1 million charter agreement.

The deal, which was made with Luxembourg’s Constellation Oil Services Holding, will use ADES’ jackup rig, Admarine 511, to support a drilling contract with Petrobras, Brazil’s state-owned energy giant.

The agreement marks a significant expansion of ADES’ Latin American operations and underscores the company’s strategy of entering new markets through alternative contracting models.

The charter, which has a duration of about 38 months, includes an optional 472-day extension that could bring the total contract term to 4.5 years. 

The Admarine 511 rig is currently undergoing preparations at the Arab Shipbuilding and Repair Yard in Bahrain ahead of deployment, with drilling operations in Brazil expected to commence in the fourth quarter of 2025.

CEO of ADES, Mohamed Farouk, commented on the new agreement, saying: “We are excited to enter the Brazilian market through this strategic Charter with Constellation to support Petrobras, Brazil’s national oil company.” 

Farouk added: “This agreement not only expands our global footprint but also enhances our business sustainability with a long-term contract that strengthens our backlog and provides extended cash flow visibility.”

The company estimates the additional backlog from the charter to be SR319 million ($85.1 million), including mobilization and demobilization fees.

ADES noted that while Constellation will operate the rig locally, the charter structure ensures that a majority of the revenue generated will contribute directly to ADES’ profitability.

Listed on the Saudi stock market, ADES saw a 1.23 percent drop in its share price to SR16.12 as of 12:30 p.m. Saudi time.

The deal comes on the back of strong financial performance by ADES Holding in 2024, reflecting the group’s continued growth trajectory. 

The firm recorded an 80.54 percent increase in net profit, reaching SR816.19 million, up from SR452.07 million in 2023. 

Revenues also surged by 43.10 percent year-on-year to SR6.19 billion, compared to SR4.33 billion the previous year.

Earnings per share rose to SR0.73 in 2024, up from SR0.59 in 2023, underscoring improved profitability and operational efficiency.

Farouk further stated that the firm selected the charter model to navigate Brazil’s operational landscape more effectively. 

“Recognizing the unique challenges of each market, ADES strategically opted for a Charter model that facilitates a seamless entry into Brazil while maximizing profitability and delivering higher returns for our shareholders,” Farouk added.


Egypt’s non-oil sector sees minor setback in March, Lebanon’s PMI declines: S&P Global 

Updated 03 April 2025
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Egypt’s non-oil sector sees minor setback in March, Lebanon’s PMI declines: S&P Global 

RIYADH: Egypt’s non-oil private sector saw a slight decline in business conditions in March, with the country’s Purchasing Managers’ Index easing to 49.2 from 50.1 in February, according to S&P Global. 

In Lebanon, the PMI slipped to a five-month low of 47.6, reflecting softer economic activity amid regional uncertainty and subdued tourism. 

A PMI reading above 50 indicates expansion, while a figure below that signals contraction.

The trends in Egypt and Lebanon contrast with broader regional performance, where Saudi Arabia, the UAE, and Kuwait maintained expansionary momentum in February, with PMIs of 58.4, 55, and 51.6, respectively. 

Egypt’s non-oil sector slips in March 

Weakened demand drove Egypt’s non-oil private sector into contraction territory, prompting firms to cut back on activity and purchases. 

David Owen, senior economist at S&P Global Market Intelligence, said: “The non-oil sector suffered a minor setback in March, with a decline in business conditions undermining the more expansionary tone set in the first two months of the year.” 

However, he noted that Egypt’s PMI remained above its long-run trend, suggesting businesses were still in a relatively stable position. 

The latest PMI survey indicated a significant easing of inflationary pressures, with input costs rising marginally — the slowest pace in nearly five years. 

S&P Global also noted that firms reported only a slight increase in selling prices, signaling a more stable pricing environment. 

“Firms will be particularly buoyed by the improved picture for inflation. Although headline inflation plummeted from 24 percent to 12.8 percent in February mostly due to base effects, a softening of input cost increases according to the March PMI data suggests there could be further reductions going forward,” said Owen. 

He added: “Part of this softening was linked to a weaker US dollar, which remains greatly influenced by the evolving state of US trade policy.” 

According to the report, non-oil companies in Egypt saw a drop in business activity for the first time this year, primarily due to weaker new order intakes. 

S&P Global also highlighted that both domestic and international demand remained subdued in March, prompting firms to cut operations and spending. 

Surveyed companies reported a reduction in headcounts as weak demand and limited capacity pressures dampened workforce needs. 

On a positive note, the construction sector performed well in March, with survey data showing robust growth in both output and new work. 

However, business activity in the manufacturing and wholesale and retail sectors remained subdued. 

Looking ahead, companies expressed concerns about the economic outlook, with output expectations falling to one of the lowest levels on record. 

“The outlook for the local economy is therefore somewhat unclear, which is reflected in a diminishing level of business expectations,” added Owen. 

Egypt is implementing a series of reforms under its the International Monetary Fund-backed economic program. 

In March, it secured a $1.2 billion disbursement from the IMF, bringing total funding under its economic reform program to $3.2 billion. The IMF also approved a $1.3 billion facility for climate-related reforms. 

While the country’s gross domestic product growth rebounded to 3.5 percent in early 2024-25 and inflation has eased, fiscal challenges remain. A $6 billion drop in Suez Canal receipts widened the current account deficit to 5.4 percent of GDP in 2023-24, despite spending controls helping achieve a 2.5 percent fiscal surplus. 

Lebanon’s PMI falls to five-month low 

A separate S&P Global report, published in association with BLOMINVEST Bank, revealed that Lebanon’s PMI declined to 47.6 in March, down from 50.5 in February and 50.6 in January. 

The drop was attributed to weaker output and new orders, driven by subdued tourism and ongoing regional instability. 

Surveyed companies reported that restrained client purchasing power and consumer hesitancy toward non-essential spending led to a contraction in new order intakes at the end of the first quarter. 

“The BLOM Lebanon PMI for March 2025 fell to a five-month low at 47.6, indicating a change of course in the economy toward instability,” said Ali Bolbol, chief economist and head of research at BLOMINVEST Bank. 

He added: “The spillover effects from clashes on the Syrian coast, to renewed escalation between Israel and Hezbollah, to delays in the disarming of the latter have all left their de-stabilizing imprint on the Lebanese private sector.” 

According to the report, Lebanese firms saw a decline in foreign sales, with challenging shipping conditions, high export costs, and regional instability acting as headwinds for international trade. 

S&P Global noted that the drop in new business intakes helped firms clear backlogs of work for the first time this year. 

Signs of spare capacity also prompted businesses to trim their workforce, though job cuts remained mild, affecting just 1 percent of surveyed firms. 

Regarding purchasing activity, Lebanese private sector firms exercised more caution than in February, with buying volumes largely unchanged. However, surveyed companies reported faster shipping times for newly purchased items. 

Despite the slowdown, business sentiment remained optimistic, with growth expectations reaching their highest level since the survey began in May 2013. 

“The only worthwhile news from the March PMI results is that expectations of a better outlook are still positive, though at a more subdued level,” concluded Bolbol. 

Last month, the IMF welcomed Lebanon’s request for support in tackling its economic crisis. 

After more than two years without a president, Lebanon elected a new head of state in January and formed a government led by Prime Minister Nawaf Salam. In February, the IMF signaled openness to a new loan agreement following talks with the finance minister. 

The previous caretaker administration failed to implement the reforms required for an IMF bailout to rescue the collapsed economy.