Standard Chartered Says UAE Business Activity to Accelerate in Q3 2026
Standard Chartered forecasts UAE business activity to accelerate in Q3 2026 as non-oil PMI readings exceed 50, supported by stronger consumption, rising investment and improving regional trade.
The latest research from Standard Chartered’s global economics team says business activity in the United Arab Emirates is set to pick up in the third quarter of 2026, underpinned by easing regional tensions and recovering trade flows. The bank points to a June non-oil Purchasing Managers’ Index (PMI) from S&P Global that rose above the 50 threshold, indicating continued expansion in the UAE’s non-hydrocarbon sector. Analysts said the recovery is being driven by resilient domestic consumption and a renewed wave of investment, with external demand expected to improve gradually.
Standard Chartered’s Q3 forecast and rationale
The bank’s analysis argues that a combination of lower oil prices, a recovering labour market and accelerated investment will support growth through Q3 2026. Standard Chartered’s global research highlights that these factors, together with policy measures to diversify trade corridors, create a more favorable backdrop for business confidence. The report frames the outlook as dependent on a gradual normalisation of regional trade and sustained domestic demand.
S&P Global PMI points to non-oil expansion
S&P Global’s June PMI for the UAE registered a reading above 50, signalling expansion in non-oil private sector activity even amid earlier regional tensions. Economists say a reading above 50 provides a reliable near-term indicator that firms are expanding output and hiring, and that order books are improving. The PMI movement reinforces other high-frequency indicators showing that services, construction and trade-related sectors are regaining momentum.
Domestic consumption and investment as twin engines
Standard Chartered’s research identifies domestic consumption and new investment projects as the primary sources of non-oil growth this quarter. Household spending on retail, leisure and housing-related services has remained robust, while corporate and sovereign-backed capital expenditure is accelerating. Analysts note that recent public and private sector deals, plus targeted incentives for foreign direct investment, are translating into higher activity in construction, logistics and business services.
Regional tensions easing and trade recovery
The bank links the improved outlook to a reduction in regional uncertainty and a shift of attention toward economic recovery across the Gulf Cooperation Council. As cross-border trade corridors reopen and shipping volumes normalise, exporters and re-export hubs in the UAE stand to benefit. Standard Chartered expects external demand to recover progressively, improving order inflows for manufacturers and traders who had been affected by earlier disruptions.
Policy focus on trade diversification and employment
Governments across the region continue to prioritise diversification of trade routes and the expansion of logistics infrastructure, which Standard Chartered says will support the UAE’s position as a regional trade and capital hub. The research also highlights a recovering labour market, with employment gains supporting private consumption and household confidence. Together, these policy priorities are expected to lift both short-term activity and medium-term resilience.
Implications for businesses and investors
For companies operating in the UAE, the bank’s outlook suggests a window of opportunity to scale operations, accelerate hiring and pursue cross-border trade strategies. Investors may see improving earnings prospects in non-oil sectors such as retail, hospitality, construction and logistics if the projected recovery materialises. Market participants will, however, be watching oil price movements and geopolitical developments for any shocks that could alter the trajectory.
Standard Chartered’s UAE, Middle East and Pakistan chief executive, Rola Abu Manneh, said the PMI readings underscore the resilience of the UAE’s non-oil economy and its ability to sustain momentum despite recent challenges. She emphasised that domestic consumption and investment are key pillars keeping activity steady, and that a gradual rebound in external demand should create more favourable conditions in Q3.
Looking ahead, the bank cautioned that the pace of the recovery will depend on the continued easing of regional tensions and the strengthening of trade links across the Gulf. Policymakers’ efforts to broaden trade corridors, combined with private sector investment, will be central to converting the near-term uptick into lasting growth. The coming months will therefore be crucial in determining whether the projected acceleration in UAE business activity holds through the remainder of 2026.
