Standard Chartered Sees Stronger Business Activity in Saudi Arabia and UAE During Third Quarter

Business activity in Saudi Arabia and the United Arab Emirates is expected to strengthen during the third quarter of 2026 as resilient consumer demand, improving regional trade conditions and ongoing economic diversification continue to support growth, according to a new report from Standard Chartered.

The bank said Saudi Arabia entered the second half of the year with solid economic fundamentals despite regional geopolitical uncertainty. Consumer spending remained robust, with point-of-sale transactions rising 6 percent year on year in May, returning to levels last seen in January.

Standard Chartered said the Kingdom’s economy has continued to benefit from sustained domestic demand, steady investment and progress under its economic diversification strategy.

“Saudi Arabia’s economy has continued to demonstrate resilience through a period of heightened regional uncertainty, reflecting the strength of domestic demand and the progress of the Kingdom’s diversification agenda,” said Mazen Bunyan, CEO and head of coverage for Saudi Arabia at Standard Chartered.

He added that improving regional conditions are expected to create additional opportunities for investment and private sector expansion during the second half of the year.

Recent economic data has reinforced that outlook. Saudi Arabia’s General Authority for Statistics reported that the country’s gross domestic product grew 3 percent year on year in the first quarter of 2026, with both oil and non-oil sectors expanding by 2.9 percent. Government activities also recorded growth of 1.5 percent during the period.

International institutions have also projected continued economic expansion. The Organisation for Economic Co-operation and Development expects Saudi Arabia’s economy to grow 3.2 percent this year before accelerating to 4.3 percent in 2027. The International Monetary Fund has forecast growth of 3.1 percent in 2026 and 4.5 percent in 2027, assuming energy production and transport continue to recover.

According to Standard Chartered, sustained investment, easing inflation and an improving labour market are expected to remain the main drivers of economic activity in the coming months.

The report also highlighted improving regional trade following the partial reopening of the Strait of Hormuz, which has allowed Saudi oil exports to recover to near-normal levels. The improvement is expected to support trade flows and broader economic activity across the region.

Saudi Arabia’s non-oil economy also continues to show strength. The latest Purchasing Managers’ Index from S&P Global rose to 53.3 in June from 52.8 in May, reflecting stronger domestic demand and rising new business orders.

The report forecast a similarly positive outlook for the United Arab Emirates. Standard Chartered said easing regional tensions and recovering trade flows are expected to support stronger business activity during the third quarter.

The bank noted that domestic consumption and investment continue to drive the UAE’s non-oil economy, while external demand is gradually improving as regional trade normalises. The country’s June Purchasing Managers’ Index remained above the 50-point threshold, indicating continued expansion in non-oil business activity.

Rola Abu Manneh, CEO for the UAE, Middle East and Pakistan at Standard Chartered, said the latest data demonstrates the resilience of the UAE’s private sector despite recent regional uncertainty. She added that improving external demand, together with strong domestic fundamentals, positions the UAE to maintain its role as a leading regional hub for trade, investment and capital flows during the remainder of the year.