The UAE economy continued to expand, but the pace of growth weakened notably. Although non-oil sectors remained in positive territory, momentum slowed to a multi-year low. Regional instability played a major role in the cooling of business activity. Clients hesitated to place new orders due to uncertainty. As a result, spending decisions became more cautious.
Firms in various industries noted that new business volumes rose at the softest rate in nearly four years. Many companies adjusted their short-term expectations. Delays in regional logistics and weaker tourism also hurt performance. While output remained high, growth drivers lost strength. This shift raised concerns about sustainability moving forward.
Companies still ramped up production to avoid a rise in order backlogs. Many businesses pushed existing teams harder to maintain delivery timelines. However, hiring showed clear signs of strain. Employment growth slowed to the lowest level in recent months. Labor shortages made it harder to meet deadlines and fulfill contracts.
At the same time, input costs edged higher, mainly due to supply chain pressures. Raw materials and transport became more expensive across several sectors. In response, some businesses lifted their prices modestly to defend margins. However, many firms feared losing clients if costs rose too fast. This limited the scale of price increases.
Despite these challenges, the UAE economy remained stable overall. Managers stayed focused on customer service and efficient operations. While confidence dipped slightly, many leaders still expect stronger conditions ahead. If regional tensions ease, a rebound in demand could follow. Business optimism hinges on external factors and supportive policy.
Dubai’s economy performed better than the national average. Sales improved more sharply in the city compared to other parts of the country. Increased consumer activity and stronger order volumes supported that recovery. However, outside of Dubai, other regions struggled to maintain momentum. Some firms in smaller markets are now adjusting growth plans.
Companies across the UAE are shifting their strategies to manage risk. Many are focusing more on cost control, staff retention, and maintaining key client relationships. The non-oil sector still holds long-term potential, especially with continued investment and reform. However, recovery now depends on restoring confidence and boosting regional stability.
The UAE economy faces a turning point. Growth continues, but headwinds are stronger than before. Companies must adapt quickly to stay competitive and protect profitability. Policymakers may consider new support measures to stimulate private sector demand. For now, firms continue to navigate a complex and uncertain environment.
