Business conditions in the United Arab Emirates experienced a setback in late Q2, as the Israel-Iran conflict disrupted June sales and dampened consumer spending. This geopolitical impact is reflected in the country's Purchasing Managers’ Index (PMI), which, despite rising slightly to 53.5 in June from 53.3 in May, indicates persistent economic pressure due to households' reluctance to spend, according to S&P Global.
Business conditions in the United Arab Emirates showed signs of strain at the end of the second quarter, directly impacted by regional geopolitical instability. The S&P Global Purchasing Managers' Index (PMI) registered a marginal increase to 53.5 in June from 53.3 in May, a figure that, while still in expansionary territory, masks underlying weakness. The primary driver for the muted performance was a disruption in sales attributed to the Israel-Iran conflict. This external shock has translated into a tangible drop-off in domestic demand, as evidenced by a noted reluctance from households to spend. The situation highlights the vulnerability of the UAE's non-oil economy to regional conflicts, with consumer sentiment appearing to be a key transmission mechanism for this geopolitical risk.
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