UAE SMEs optimistic as 3 in 5 report revenue growth despite cost increases: Survey
UAE SMEs continue to build on the momentum of the resilience demonstrated in recent years, according to RAKBANK's SME Confidence Index.
Based on insights from more than 1,200 UAE-based SMEs, the Confidence Index measures business sentiment for small and medium enterprises.
Measured against a base score of 50 the latest survey reveals a tally of 57, suggesting a stable and optimistic sentiment against a dynamic economic environment.
UAE business optimism
Despite a marginal drop in the overall Index score by four points from 61 in 2023 to 57 in 2024, the findings show that optimism remains steady, with over two-thirds (68 per cent) of SMEs viewing the future business environment as favourable, and more than 60 per cent reporting revenue growth over the past two years.
While challenges persist, including rising operational costs, corporate tax implementation, and high borrowing costs, the overall trajectory signals adaptability and optimism among SMEs in navigating the evolving business landscape.
Raheel Ahmed, Group CEO of RAKBANK, said: 'This has been a milestone month for RAKBANK's Business Banking Group, reinforcing our commitment to the UAE's dynamic SME sector.
'In a further boost to the SME ecosystem, RAKBANK and Emirates Development Bank announced a strategic AED1bn ($272m) co-financing partnership during the 'Make it in the Emirates' forum, held under the patronage of the Ministry of Industry and Advanced Technology.
'Small and medium enterprises are the backbone of every thriving economy, and in the UAE, they play a central role in driving diversification and sustainable development.'
The report showcases several trends shaping the SME sector in 2025.
Consumer and Retail Services remain the highest-performing sector, driven by a continued rise in consumer spending and successful adoption of new business channels.
The report also highlights how SMEs across industries are prioritising product innovation and market expansion as key strategies for growth in a competitive landscape.
While Consumer andRetail Services SMEs achieved a sector confidence score of 60, Construction and Manufacturing (57), Transport (57), and Trading (58) remained steady in confidence, while Public Services and Professional Services saw more notable declines to 56, largely due to increased costs and lower confidence in debt servicing.
Key takeaways from the survey include:
Overall confidence remains above baseline: While the Index score decreased slightly to 57 from 61 in 2024, it still signals positive sentiment across the board
Revenue growth continues: More than 3 in 5 SMEs reported an increase in annual revenue over the last two financial years
Optimism for smaller firms: SMEs with revenue up to AED30m ($8.2m) posted the highest confidence score at 58, while larger SMEs (AED30m-100m/$8.2m-27.2m) dipped to 55
Rising costs present challenges: Over two-thirds of SMEs experienced higher operational costs, while only 39 per cent expressed confidence in meeting debt obligations, down from last year
Digital adoption is on the rise: 22 per cent of SMEs now sell their products or services online, and 45 per cent use digital banking channels monthly
Sustainability is gaining attention: 55 per cent of SMEs are either on or planning to begin a sustainability journey, with 1 in 3 citing it as a short-term business objective
While UAE SMEs remain optimistic, they are also navigating barriers such as increased costs of doing business, rising demand for credit, competitive pressures, and adapting to the corporate tax regime introduced in 2024.
To address these issues, many SMEs are investing ambitiously in technology, operational efficiencies, and sustainability strategies aimed at long-term growth.
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