Non-oil sectors in UAE and Saudi Arabia maintain strong growth trajectory despite Iran war

The non-oil private sectors in the UAE and Saudi Arabia have continued to grow robustly in September, despite the ongoing Iran war. The Riyad Bank purchasing managers' index for the kingdom's non-oil economy reached 55.3 in September, marking the strongest improvement since February and the sixth consecutive month of positive business conditions.

This growth was primarily driven by a surge in new orders, with demand recovering well after a mid-year slowdown in mid-2026. Businesses surveyed reported increased client numbers and higher spending, attributing the acceleration to demand-led factors. Naif Alghaith, chief economist at Riyad Bank, stated that the rise in new orders signals positive prospects for the coming months.

While the recovery was mainly driven by the domestic market in September, new orders from foreign customers have been declining for seven consecutive months. Companies cited supply chain disruptions due to the regional conflict, resulting in shipping delays. The tourism and leisure, retail, aviation, and property sectors in the Gulf were significantly impacted by Iran's attacks on civilian infrastructure and energy installations during the early stages of the war. The UAE and Saudi Arabia, Opec's largest oil producer, faced attacks, disrupting their economies.

In Dubai, the non-oil private sector business activity also experienced a notable growth trajectory in September. The Dubai PMI increased to 54.5 from 54.1 in August, marking the fastest pace of growth so far in 2026. The surge in output and new orders, supported by a significant rise in new business from abroad, contributed to the improvement.

However, employment increased, but the backlog of work also rose sharply, with output price inflation accelerating to its fastest rate since January 2014 as companies passed on higher input costs to customers.