Saudi Arabia and the UAE are expected to see stronger business activity in the third quarter as consumer demand, investment and trade continue to improve.
Saudi economy enters H2 on a strong footing
Business activity in Saudi Arabia and the UAE is likely to accelerate in the third quarter of 2026, according to Standard Chartered.
The bank said both economies remained resilient despite recent regional tensions. It expects stronger domestic demand, higher investment and improving trade to support growth during the second half of the year.
Saudi Arabia started the second half with solid economic momentum. Point-of-sale transactions rose 6% year on year in May. The increase shows that consumer spending has returned to January levels.
Standard Chartered said steady investment, easing inflation and an improving labour market will continue to support business activity.
The bank also said the partial reopening of the Strait of Hormuz has restored Saudi oil exports to almost normal levels. As a result, trade activity is expected to strengthen during the third quarter.
Official data supports the positive outlook. Saudi Arabia’s economy expanded 3% year on year in the first quarter of 2026. Oil activities, non-oil sectors and government services all recorded growth.
Mazen Bunyan, CEO and Head of Coverage for Saudi Arabia at Standard Chartered, said:
“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.”
He added:
“As regional conditions continue to improve, we expect this resilience to translate into stronger business momentum, creating further opportunities for investment and private sector growth during the second half of the year.”
The report also highlighted continued growth in Saudi Arabia’s non-oil private sector. Stronger domestic demand and rising new orders supported the expansion.
UAE business activity remains resilient
Standard Chartered expects the UAE to record healthy business activity in the third quarter.
The bank said domestic consumption and investment continue to drive non-oil growth. At the same time, external demand should improve as regional trade flows return to normal.
The outlook follows another strong Purchasing Managers’ Index (PMI) reading in June. The index remained above the 50-point mark, signalling continued expansion in non-oil business activity.
Rola Abu Manneh, CEO for UAE, Middle East and Pakistan at Standard Chartered, said:
“Domestic consumption and investment continue to support growth, while the gradual recovery in external demand provides a more constructive outlook for the third quarter.”
She added that the figures reflect the UAE’s strong economic fundamentals. They also reinforce the country’s position as a regional hub for trade, investment and capital flows.
Improving trade supports Gulf outlook
Standard Chartered said the partial reopening of the Strait of Hormuz has improved oil exports from both Saudi Arabia and the UAE.
Saudi oil exports have almost fully recovered. Regional exports are also improving steadily.
The bank expects resilient domestic demand, continued investment and better trade conditions to support stronger business activity across both economies during the third quarter of 2026.
