Growth in the UAE’s non-oil business sector slowed to its weakest pace in more than four years in July, as geopolitical tensions weighed on demand, a survey showed on Tuesday. The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) fell to 52.9 in July from 53.5 in June, marking its lowest level since June 2021. While still above the 50.0 mark that indicates growth, the rate of expansion was softer than the survey’s long-run trend.
“New order volumes helped firms to expand, but this trend is declining, with the latest data indicating the softest rise in incoming new work in almost four years,” said David Owen, senior economist at S&P Global Market Intelligence, as quoted by Reuters.
“Should regional tensions ease, we may see a recovery in sales growth in the coming months.”
The slowdown was largely driven by hesitancy among clients to commit to new spending due to geopolitical tensions in the region, alongside weaker tourism activity and trade disruptions. New orders increased, but at the slowest pace since mid-2021.
Despite the slowdown in demand, output continued to expand sharply as firms sought to prevent backlogs from rising further. However, employment growth eased, marking the weakest uplift in four months, as companies faced challenges in completing work on time. Input cost pressures accelerated slightly, prompting businesses to raise their selling charges, although the increase was mild. Optimism for future activity remained, driven by hopes of strengthening demand levels, though confidence eased slightly amid global economic uncertainty and heightened competition. Dubai’s non-oil sector showed a solid recovery, with its PMI rising to 53.5 in July from 51.8 in June, driven by a sharper improvement in sales volumes.
Read more: UAE GDP hits $483.6 billion in 2024, marking 4 percent growth
Contribution to GDP from non-oil sector
According to recent projections by the International Monetary Fund (IMF), the UAE economy is expected to grow by around 4.0 percent in 2025, one of the highest growth rates in the Gulf Cooperation Council region, largely driven by the expansion in non-oil sectors such as tourism, transportation, financial services, construction, real estate, and communications.
Abu Dhabi’s non-oil foreign trade recorded a remarkable 34.7 percent increase in the first half of 2025, reaching AED195.4 billion (approximately $53.2 billion), fueled by a 64 percent surge in non-oil exports to AED78.5 billion and a 35 percent rise in re-exports to over AED36 billion. This reflects the effectiveness of Abu Dhabi’s economic diversification efforts and robust infrastructure and logistics.Â
The emirate’s non-oil sector contributed 54.7 percent to its GDP in 2024, marking a 6.2 percent growth to AED644.3 billion, with the total GDP reaching an all-time high of AED1.2 trillion (Stats Centre – Abu Dhabi, 2025).Â
Construction activity in Abu Dhabi expanded by 10.2 percent in Q1 2025, reaching AED27.5 billion, driven by infrastructure and urban development projects, while the manufacturing sector maintained a 5 percent growth rate contributing 9.8 percent to the emirate’s GDP, according to Statistics Centre – Abu Dhabi.Â
Dubai also showed resilience, with real estate transaction volumes up 24 percent year-on-year and values increasing by 38 percent in the first half of 2025, alongside tourism arrivals exceeding pre-pandemic levels by 21 percent, supported by a high hotel occupancy rate averaging 83 percent.
