Business activity in Saudi Arabia and the UAE will accelerate in Q3.
The latest Standard Chartered outlook points to a solid start to the second half of 2026, with consumer spending and investment both showing signs of strength. Point‑of‑sale transactions rose 6 percent year‑on‑year in May, returning to levels seen in January, according to the bank’s data.
Domestic demand and investment boost outlook
Domestic demand in the Kingdom remains firm, buoyed by steady consumer confidence and a gradual easing of inflationary pressures. Mazen Bunyan, CEO and head of coverage for Saudi Arabia at Standard Chartered, said the economy has weathered heightened regional uncertainty and continues to benefit from diversification efforts.
“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,”
— Mazen Bunyan, CEO and head of coverage for Saudi Arabia at Standard Chartered
Investment activity also stayed robust, with sustained capital spending across key sectors. The bank identified three main drivers for the anticipated pickup: continued investment, easing inflation, and an improving labour market. Government data released last month showed the Kingdom’s gross domestic product grew 3 percent year‑on‑year in the first quarter of 2026, while oil and non‑oil activities each expanded by 2.9 percent.
Regional trade conditions improve
Regional trade dynamics are showing recovery as the partial reopening of the Strait of Hormuz has enabled a near‑full rebound in Saudi oil exports. This development is expected to add tailwinds for broader economic activity in the coming months. The Organisation for Economic Co‑operation and Development projected Saudi GDP to expand by 3.2 percent in 2026, with a further rise to 4.3 percent in 2027.
The International Monetary Fund’s April forecasts align closely, putting Saudi growth at 3.1 percent for 2026 and raising its 2027 outlook to 4.5 percent, assuming energy production and transport normalise. The IMF also noted that Saudi Arabia is among the Gulf economies least affected by regional conflict involving Iran.
“The combination of resilient domestic demand, continued investment and improving regional conditions is expected to support stronger business momentum through the third quarter,”
— Standard Chartered
Both Saudi Arabia and the United Arab Emirates stand to benefit from these trends, with private‑sector growth opportunities likely to expand as trade routes stabilise. The bank’s report suggests that the second half of the year could see heightened investment flows, especially in sectors aligned with each country’s diversification agendas.
Frequently asked questions
What drives Saudi and UAE business growth in Q3 2026?
Standard Chartered highlights resilient domestic demand, easing inflation, and a near-full recovery in oil exports as key drivers for stronger business activity in Saudi Arabia and the UAE during Q3 2026.
What is Saudi Arabia's 2026 GDP growth forecast?
The OECD projects 3.2% GDP growth for Saudi Arabia in 2026, while the IMF forecasts 3.1%, with both citing resilient domestic demand and improved trade conditions.
How does Strait of Hormuz reopening affect UAE/Saudi trade?
The partial reopening of the Strait of Hormuz has enabled a near-full rebound in Saudi oil exports, boosting regional trade and adding momentum to economic activity in the UAE and Saudi Arabia.
Who is Standard Chartered's Saudi CEO?
Mazen Bunyan, CEO and head of coverage for Saudi Arabia at Standard Chartered, noted the Kingdom’s economy has shown resilience amid regional uncertainty and diversification progress.
