UAE export growth to remain solid, boost to GDP expected - HSBC
he UAE’s export growth is expected to remain solid and the gross domestic product, or GDP, growth is forecast to pick up in 2013-14.
Non-oil economy will continue to recover as construction, tourism and trade flows generally continue to recover, HSBC said on Wednesday.
India, China, and Vietnam, which are heavy energy consumers, will be the fastest-growing export markets for the UAE in 2016-20 and in 2021-30, the bank said.
As a major oil exporter, the UAE’s growth and trade performance has been boosted by high world energy
prices in the past few years, which saw exports growing by over 30 per cent in 2011 and by about 15 per cent in 2012. High oil revenues have in turn driven rapid import growth.
However, despite the slightly lower level of oil prices seen for the next two years, driven by the non-oil economy, which is on a recovery mode, the country’s export growth is forecast to remain solid, HSBC Global Connections Report said.
The report said economic activity would continue to be driven by heavy state spending, with the main focus still being on construction projects and the property sector but with Dubai continuing to develop its trade, tourism and logistics sectors.
In 2012, the UAE’s GDP growth remained in the region of four per cent, but a steady pick-up in activity is seen in the coming years as oil and non-oil sectors recover, with exports and imports growing solidly and construction still rising, the report said. In tandem with the pickup in exports, UAE has witnessed a rapid import growth driven by high oil revenues.
“As much of the UAE’s oil shipments are destined for Asian markets, countries such as India, Korea and Singapore are among its main export markets. As a result, and with China becoming an increasingly important destination as well, the UAE exports to Asia will continue to grow more strongly than those to other regions, growing by a little over eight per cent a year in 2013-15 and then accelerating to about 10 per cent a year in 2016-20,” the bank said.
Exports to Europe (excluding Russia) are forecast to perform quite strongly, rising by about five per cent per annum in 2013-15 despite the subdued economic performance in the eurozone, before picking up to eight per cent in 2016-20. Exports to other regions are expected to be more subdued, said the report.
“On the import side, the coming years will see a continued shift away from the traditional suppliers, which used to be in Europe but in recent years have become more diversified as fast-growing Asian countries have taken an increasing market share of sectors such as construction. Imports from India, China and, increasingly, Vietnam will show the fastest growth in the coming years, while Turkey and Poland will also continue to figure strongly in terms of growth as economic links between these countries build,” HSBC said.
The UAE’s exports will continue to be dominated by petroleum and its related products.