InfoPro survey shows
demand collapse, costs rising

Smaller firms are the hardest hit

A survey by InfoPro Research reveals a business sector that is still operating but under significant strain, with the economic shock of the 2026 conflict driven not just by physical destruction but also by a sharp deterioration in market conditions, rising costs, and operational disruption.

The findings point to a broad-based contraction in activity across sectors. Most firms remained open in some capacity during the conflict period, yet the dominant pattern is one of reduced operations. Companies are functioning below normal levels, constrained by weaker demand, disrupted staffing, logistical challenges, and mounting cost pressures.

Revenue losses stand out as the clearest indicator of distress. Around three quarters of surveyed firms reported lower revenue in March 2026 compared to both February 2026 and March 2025. The average decline among affected firms was steep, suggesting that the shock is not simply a short-term interruption but a marked deterioration relative to both the immediate pre-conflict period and the previous year.

Demand Collapse Meets Rising Costs
The survey highlights a dual pressure shaping business conditions. Demand has weakened significantly, with lower sales cited as the most common constraint. Operating costs have risen across multiple fronts, particularly in energy, transport, and raw materials.

This combination is especially damaging. Firms are selling less while spending more to maintain operations, compressing margins and limiting their ability to absorb shocks. In response, many businesses have raised prices, adjusted delivery routes, drawn down inventories, or temporarily scaled back parts of their operations. These measures reflect a focus on preserving liquidity and continuity rather than pursuing growth.

Despite relatively limited full closure days on average, the impact on activity remains pronounced. The data suggests that businesses have stayed formally open but are operating with lower throughput and reduced efficiency.

Smaller Firms Bear the Brunt
Firm size emerges as a key differentiator. Small and medium-sized enterprises are disproportionately affected, reporting more frequent and deeper revenue declines, greater cash-flow pressure, and heavier reliance on reduced working hours. These firms also face tighter constraints on liquidity and fewer options to manage disruption. Many reported difficulties maintaining salary payments and operating levels, highlighting their vulnerability in a prolonged crisis.

Larger firms show greater resilience, though not immunity. They are more likely to report stable operations and to expect steady or improving production in the near term. Their advantage lies in greater financial buffers and operational flexibility, allowing them to manage disruptions more effectively. However, they too face challenges, particularly in staff availability and temporary site closures.

Sector Pressures Vary
The impact of the conflict differs across sectors. Trade businesses appear most exposed to the immediate commercial shock. They report the highest incidence of revenue declines, alongside significant logistics disruptions and cost pressures. Weak consumer demand and constraints on movement have compounded their challenges.

Manufacturing firms face a different set of constraints. Their primary difficulties lie in sourcing inputs, managing energy costs, and maintaining economically viable production levels. Rising costs for raw materials and transport, combined with supply chain disruptions, have forced many to reduce production hours or scale back output.

Service-sector firms show somewhat greater resilience in terms of operating status, with a higher share continuing at or near pre-conflict levels. However, they are not insulated from the broader downturn. Demand weakness, staff disruption, and uncertainty about future activity remain significant concerns.

Labor Adjustments Remain Cautious
The labor market response has so far been measured. Instead of widespread layoffs, firms have relied more on hiring freezes, reduced working hours, and lower production levels. This suggests an effort to retain employees while adjusting costs.

However, this approach may mask underlying stress. Workers may remain formally employed but face reduced income, fewer hours, or greater uncertainty. While salary disruptions are less widespread than revenue declines, firms that have reduced employment or pay have done so sharply, pointing to a degree of polarization within the labor market.

Cumulative Stress from Repeated Shocks
Many firms entered the 2026 conflict without fully recovering from the 2024 war. Only a minority reported complete recovery before the latest escalation, leaving much of the business sector with weakened balance sheets and limited capacity to absorb another shock. This cumulative stress is reflected in perceptions of the current conflict, with many firms rating it as more intense than the previous one. The result is an economy where resilience is eroding over time, even in the absence of widespread physical damage.

Cautious Outlook, Weak Investment
Looking ahead, expectations are mixed. A meaningful share of firms anticipates some improvement in production over the next three months, but a comparable share expect further decline. Many expect employment levels to remain unchanged, reflecting a wait-and-see approach. Investment intentions are particularly weak. A large number of firms report no plans to invest or uncertainty about future investment decisions. This hesitation signals a risk that recovery, even if it begins, may remain shallow and focused on maintaining operations rather than expanding capacity.

Policy Focus on Liquidity and Continuity
The survey points to clear policy priorities. With limited physical damage reported, traditional reconstruction measures alone are unlikely to address the core challenges facing businesses. Instead, the emphasis should be on liquidity support, operating cost relief, and measures that sustain demand and logistics. Small firms, in particular, require rapid access to working capital and relief on rent and supplier payments. Trade businesses need support to restore demand and manage inventory, while manufacturers require assistance with energy, transport, and input supply. Service firms would benefit from measures that stabilize both demand and workforce availability.

Across all sectors, the central objective is to prevent temporary disruption from becoming permanent damage. Maintaining business continuity, preserving employment, and restoring confidence are critical to avoiding a deeper and more prolonged economic contraction.

The picture that emerges is of an economy still functioning, but significantly weakened. Firms remain active, yet many are operating below capacity, facing severe revenue pressure, and postponing key decisions. The challenge now is not only to provide immediate relief, but to sustain the conditions necessary for recovery once stability returns.