Unrest hits UAE trade with Arab nations
The Arab Spring has slowed the UAE’s trade with the five countries affected by the unrest. According to a report by the Ministry of Foreign Trade, there was a 32 percent decline in the first quarter of 2011 compared with the fourth quarter of 2010.
Libya led with a decline of Dh932 million or 73 percent of the total, followed by Tunisia by Dh122 million or 10 percent, Yemen by Dh102 million or 8 percent, Egypt Dh83 million or 7 percent, and Syria by Dh19 million or 2 percent. However, UAE direct trade is experiencing steady growth and expansion in new markets that has helped offset this.
Dr Abdul Hamid Radwan, a leading economist, told Gulf News: “The UAE’s exports to the Arab market represent 8 percent of the export volume, while re-exports represent 13 percent. However, the political uprisings in some of the Arab countries have affected the economic situation in these countries in general as well as their trade relations with the rest of the world in particular.” Radwan said trade with the five countries declined to Dh1.3 billion from the last quarter of 2010 to the first quarter of 2011.
“However, since the total trade volume between the UAE and these five countries doesn’t represent more than 2 percent of the UAE’s trade, this slow-down will not have any effect on the UAE’s trade in general,” Radwan added. He said it would have a greater impact if the decline affected trade between the UAE and one of its major partners like India or China.
On the other hand UAE trade has expanded to over 202 markets with more focus on Asia where exports account for 47 percent of the UAE’s total and imports represent 58 percent and re-exports 48 percent, according to the Ministry of Foreign Trade’s 2010 statistics.
According to the Ministry, in 2010 trade between these countries and the UAE was less than 2 percent of trade totalling Dh14.4 billion, imports of Dh7.86 billion, exports of 2.7 billion and re-exports of Dh3.78 billion.
However, comparing these figures with 2009, trade between the UAE and these countries grew one percent despite the impact of the world economic crisis when UAE trade grew 14 percent. Radwan added that these countries have been downgraded in the UAE trade partner index. “Libya was downgraded to number 31, Egypt 34, Yemen 42, Syria 73 and Tunis 87.”
Dr Mohammad Al Asoomi, a leading economist, told Gulf News: “While trade has slowed down in the Arab countries that are witnessing political uprisings, it has achieved remarkable growth in the UAE. “The contribution of countries like Libya, Egypt, Tunisia, Yemen and Syria to the UAE’s trade volume is already marginal, so whatever the decline in trade relations with these countries, the effect would be marginal. “However, the overall trade volume of the UAE will get better once political settlements take place,” he added.
During the first five months of 2011 Dubai’s direct trade increased 27 percent despite the regional unrest, another study by the Dubai Chamber of Commerce and Industry has found.
Dubai Chamber members’ exports and re-exports increased 17.1 percent in the first eight months of this year, with goods valued at Dh162.1 billion, compared with Dh138.4 billion during the same period in 2010. The study indicated that there was some impact on Dubai’s trade with certain markets in the Middle East and North Africa (MENA), but these did not significantly impact the overall figures.
Despite economic forecasts for the region pointing to growth in Dubai’s trade in 2011, the political unrest has stalled increases to these countries, the study found. Exports and re-exports to Egypt have slowed this year. Goods transported to the country fell 12 percent to Dh1.5 billion in the first four months, compared to the same period in 2010, according to the study.
Unrest in Tunisia, though short, stunted growth in trade in the first four months, which was insignificant at less than 1 percent. This paled in comparison to the growth of 22 percent between 2009 and 2010, the study found.
The escalation of unrest in Libya and Yemen has taken a more significant toll on trade with these countries. The first eight months of the year witnessed a 58 percent drop in the flow of goods to Libya, while a corresponding contraction of 43 percent was noted in the flow of goods to Yemen.
- Frozen: Arab Spring economies barely trading with one another
- China-Pakistan economic corridor: a game-changer for the Middle East?
- Suspended tax transfers pushed Palestinian economy to the brink
- Egypt passed the economic conference with flying colours, but what's next?
- Why the GCC really needs a VAT tax