Business activity in the UAE’s non-oil private sector eased slightly due to ongoing global tariff uncertainty. Despite this, the country’s economic fundamentals remain strong, according to S&P Global Market Intelligence.
The UAE’s S&P Global Purchasing Managers’ Index (PMI) fell to 53.3 from 54.0. The reading, though still above the 50-point growth threshold, was the lowest since late 2021.
S&P Global said demand remained strong, which continued to drive output growth. However, the overall pace of expansion has moderated.
“Although businesses continued to welcome strong demand from their clients, there were some reports that competitive pressures and weaker trade amid US tariffs had weighed on growth,” said David Owen, senior economist at S&P Global.
“The survey signals that the UAE economy is performing well overall. Still, the softer increases in output and new orders hint at easing momentum.”
The report also highlighted a record drop in input stocks. Many companies reduced inventories to streamline operations. Inflationary pressures eased too, with input prices rising at their slowest pace in several months.
“The sharp cutback in stocks and the broadly subdued outlook for activity suggest that firms are gearing up for softer growth,” Owen added.
The UAE continues to diversify its economy beyond oil. Sectors such as technology, manufacturing, tourism, and trade are expanding steadily. The economy grew by 3.9% recently, with non-oil growth at 4.6%, according to Central Bank figures.
The Central Bank forecasts overall GDP growth of 4.7%. Non-oil growth is expected to reach 5.1%. Further ahead, the economy may grow by as much as 5.7%, supported by a broadening industrial base.
Globally, U.S. tariffs continue to disrupt trade and supply chains. Some UAE businesses report little direct impact thanks to local supply networks. Still, overall business sentiment has been affected.
“Higher sales often translated into greater activity, although some reported that global economic uncertainty linked to US tariffs had negatively affected output,” the report said.
Dubai’s PMI remained at 52.9, matching its lowest level since early 2022. Despite this, S&P Global described a “solid expansion” in the emirate’s non-oil sector.
New order growth in Dubai hit a four-month high. Firms credited this to improved client confidence, marketing efforts, and competitive pricing.
The UAE’s non-oil economy remains resilient. Businesses continue to adapt to global challenges while benefiting from strong domestic demand and government-led diversification.
