UAE and Saudi Arabia Non-Oil Sectors Grow Despite Iran War Challenges

The non-oil private sectors in the UAE and Saudi Arabia continued their growth in September, despite the ongoing Iran war. In Saudi Arabia, the Riyad Bank purchasing managers’ index (PMI) rose to 55.3 from 53.8 in August, indicating strong business activity improvements. This marked the sixth consecutive month of growth, driven by a surge in new orders, which hit levels close to the index’s long-run average, signaling a recovery from a mid-2026 slowdown. Naif Alghaith, chief economist at Riyad Bank, noted that the acceleration was primarily demand-led, with new orders increasing at their fastest pace since February.

While domestic demand drove the recovery, new orders from foreign customers have declined for seven months due to supply chain disruptions and regional conflicts. The war, now in its seventh month, has affected sectors like tourism, retail, aviation, and properties, though Gulf economies have gradually bounced back. The PMI reading aligned with Saudi Arabia’s broader economic picture, which is supported by domestic consumption, investment, and government projects.

In the UAE, demand conditions in the non-oil private sector improved significantly, allowing companies to raise selling prices at the fastest pace in over 15 years due to higher input costs. The S&P Global UAE PMI remained stable at 55.3, indicating robust economic activity. David Owen, principal economist at S&P Global Market Intelligence, highlighted that businesses saw improved demand both locally and abroad, with new export business rising at the strongest rate in nearly two years. The improvement was driven by a rapid rise in output, the fastest since February before the war began.

Dubai, a major business and tourism hub, also maintained strong growth, with its PMI rising to 54.5 in September. The growth was fueled by a sharp increase in output and new orders, supported by the strongest expansion in new business from abroad in two years. Employment in Dubai increased, though the backlog of work grew sharply. Companies passed on higher input costs to customers, leading to the fastest rate of output price inflation since January 2014.