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Standard Chartered’s latest analysis forecasts stronger momentum for UAE business activity heading into the third quarter of 2026, even as the June PMI indicated a moderation in the pace of expansion. S&P Global data placed the headline index at 50.8 in June, down from 52.6 the prior month but still above the 50 mark that separates growth from contraction.
Rola Abu Manneh, chief executive for the UAE, Middle East and Pakistan at Standard Chartered, said the latest PMI reading reinforces the resilience of the UAE’s non-oil economy and private sector activity during a period of regional uncertainty. She noted that domestic consumption and investment continue to support overall growth while a gradual recovery in external demand is helping to create a more constructive outlook for the third quarter. These trends reflect the depth of the UAE’s economic fundamentals and its continued role as a leading hub for trade, investment and capital flows, Abu Manneh added.
The bank identified softer oil prices, a recovery in the job market and an acceleration in investment growth as the three key drivers expected to reinforce private sector activity through the second half of the year. Sustained capital expenditure in infrastructure, logistics and services sectors is deepening the non-oil growth foundation, according to the research note. Improving labour market conditions should support household spending and strengthen demand across key domestic industries.
Trade and energy flows across the Gulf are displaying initial signs of stabilization, with the partial reopening of the Strait of Hormuz enabling a near full recovery in UAE oil export volumes, Standard Chartered reported. Broader regional oil exports are normalizing at a slower rate depending on individual economies’ exposure to disrupted shipping routes. The UAE’s continued shift toward non-oil industries will assume greater importance in maintaining overall growth as these patterns evolve.
A World Bank report projected economic growth across GCC countries to reach 4.5 percent in 2026, supported by the anticipated rollback of OPEC+ oil production cuts and robust non-oil sector expansion. The UAE has consistently posted PMI readings above the expansion threshold throughout recent external shocks, underpinned by diversified activity and solid domestic fundamentals, S&P Global figures show. Business confidence held steady in June despite the softer activity, aided by government investment pipelines and confirmed contracts.
The research underscores how the UAE’s positioning in logistics, finance and trade has continued to draw capital inflows even during periods of elevated regional uncertainty. Market observers have pointed to improved coordination in logistics and alternative trade corridors as factors reducing future vulnerability to disruptions. This diversified model is expected to enable the UAE to secure a larger portion of the projected GCC recovery.
