UAE Non-Oil Growth Slows to Five-Year Low Amid Weak Demand
The United Arab Emirates’ non-oil private sector continued to grow in June, but at its slowest pace in more than five years, according to new data from S&P Global, according to Arab News.
The Purchasing Managers’ Index (PMI), a key measure of business activity, fell to 50.8 in June from 52.6 in May. While any reading above 50 signals growth, the latest figure shows a clear slowdown.
Economists say the weaker performance was driven by cautious customer spending, rising costs, and ongoing geopolitical tensions in the region. Despite these challenges, strong domestic demand and continued government investment helped keep the sector in positive territory.
One of the most notable developments was a sharp drop in employment. Jobs declined at the fastest rate since August 2020, as companies reduced staff to control costs and respond to softer demand.
Although new business activity increased slightly compared to recent months, it remained below average levels. Many customers delayed spending decisions, while tourism activity also stayed weak, adding further pressure on businesses.
At the same time, companies faced high input costs, even though inflation eased slightly. In response, many firms focused on cutting expenses rather than expanding operations.
Dubai showed a similar trend. Its non-oil PMI dropped to 50.7, marking its weakest growth since early 2021. While output rose at a faster pace, overall business activity remained limited due to lower travel demand and delayed spending.
Despite the slowdown, the UAE’s broader economic strategy continues to focus on diversification. The non-oil sector grew by 5.3 percent in early 2025 and now makes up more than three-quarters of the country’s economy.
Analysts say easing regional tensions and improved shipping conditions could support recovery in the coming months. However, they warn that business confidence remains fragile, and any rebound is likely to be gradual.
