UAE SMEs remain optimistic amid economic pressures, reveals RAKBANK index

Small and Medium Enterprises (SMEs) in the UAE are maintaining a steady sense of optimism despite rising costs and economic headwinds, according to RAKBANK’s latest SME Confidence Index.

The 2025 report, compiled in partnership with RFI Global, reflects a confidence score of 57, signalling continued resilience in the sector.

The findings are based on responses from over 1,200 SMEs across the UAE, surveyed between October and December 2024.

While the Index score has declined from 61 in 2023 to 57 in 2024, it remains above the base level of 50, pointing to overall positive sentiment.

Also, 68 per cent of SMEs view the future business environment as favourable, and over 60 per cent reported revenue growth in the past two years.

“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,” said Raheel Ahmed, group CEO of RAKBANK. “We continue to reinforce our commitment to be a trusted partner on their journey, providing the insights, tools and support they need to grow their businesses and contribute to the wider economy.”

Ahmed added that the bank launched the SME Confidence Index in 2024 to capture sentiment, challenges and growth outlook.

In a major move to support the SME ecosystem, RAKBANK and Emirates Development Bank announced a strategic Dhs1bn co-financing partnership during the ‘Make it in the Emirates’ forum, under the patronage of the Ministry of Industry and Advanced Technology.

Sector trends and challenges for SMEs

Consumer and Retail Services emerged as the highest-performing sector, achieving a confidence score of 60, supported by increased consumer spending and expansion into new business channels.

Construction and Manufacturing, Transport, and Trading sectors scored 57, 57, and 58 respectively, showing stable sentiment. However, confidence in Public Services and Professional Services dipped to 56, largely due to higher operating costs and concerns over debt servicing.

While more than three in five SMEs recorded revenue increases over the past two years, over two-thirds experienced rising operational expenses.

Only 39 per cent expressed confidence in meeting debt obligations, down from the previous year.

The report found that smaller SMEs (with revenues up to Dhs30m) had a higher confidence score of 58, while larger SMEs (with revenues between Dhs30–100m) registered a lower score of 55.

Digital and sustainable growth in focus

Digital transformation continues to gain ground among UAE SMEs. Some 22 per cent now sell products or services online, while 45 per cent use digital banking channels monthly.

In parallel, sustainability is becoming a growing priority, with 55 per cent of SMEs either already on or planning to embark on a sustainability journey. One in three SMEs cited sustainability as a short-term business objective.

While navigating ongoing challenges — including the corporate tax regime introduced in 2024, demand for credit, and operational pressures — many SMEs are investing in technology, talent and market expansion to strengthen their competitive edge.

“The sector’s forward-looking mindset is especially encouraging,” Ahmed noted. “We’re seeing increased focus on entering new markets, investing in talent, and modernising payment infrastructure. We see our role as a partner in that journey, providing not just financial solutions but also the advisory support needed to help them grow with confidence.”