The so-called Arab Spring has taken its toll on Dubai's re-exports, cutting onward shipments in the first five months of this year by an average of a quarter to some countries affected by unrest.
Re-exports to Libya by members of the Dubai Chamber of Commerce and Industry fell the most sharply, dropping 70.4 per cent in the first five months compared with the same period last year. The Egyptian re-export market fell by 31.9 per cent, with onward shipments to Syria declining by 11.1 per cent. The Sudan market contracted by 13.5 per cent.
"Trade with Egypt should rebound after the country's elections but the future outlook for trade with Libya and Syria is less clear," said Mahdi Mattar, the head of research and chief economist at CAPM Investment in Abu Dhabi.
The dip has failed to stop a continuing upturn in trade after the global recession, however. Re-exports rose by 17 per cent to a record Dh100 billion (US$27.22bn) during the five months, compared with Dh85bn in the same period last year. The rise indicates traders are successfully seeking out alternatives to rocky markets. Onward shipments to Iraq, Pakistan and Nigeria increased by 90.6 per cent, 21.9 per cent and 22.7 per cent, respectively, during the period. Despite widespread unrest in the country, re-exports to Yemen rose 17.5 per cent.
But with Egypt, Syria, Sudan and Libya all featuring within the Dubai chamber's top 14 re-export destinations outside of the GCC, traders will be closely watching political developments in those countries.
Within the GCC, re-exports to Bahrain fell by 6.1 per cent to Dh1.3 million, data from the chamber showed. Figures on the value of re-exports to the other countries were not provided by the chamber.
As a regional trading centre responsible for the onward shipment of goods from elsewhere, Dubai counts re-exports as the biggest part of its overall trade.
With Libya embroiled in civil war and Egypt's economy still recovering from a revolution that led to the removal of its president Hosni Mubarak in February, a reduction in goods shipped to those markets is to be expected.
Libya's trade has also been struck by global sanctions against senior political figures and some companies, hindering shipping activity. Syria's economy has also been hit by sanctions mainly targeting Bashar Al Assad, the president.
Financing trade deals with countries affected by unrest has become trickier as uncertainty has persisted in the region. Some banks and export credit insurers restricted the list of markets with which they are willing to finance trade and, in certain cases, pushed up the cost of securing financing.
"The outlook for trade finance in the region remains positive over the long term," said Tim Evans, HSBC's head of trade and supply chain in the Middle East and North Africa region.
"While the recent geo-political issues have affected trade in the short term they have not altered the demographics or the underlying demand driving trade growth in the region - it remains ideally placed to benefit from international trade flows, as a key trade hub."
To offset uncertainty in some markets, several Dubai companies have been turning their focus to emerging opportunities.
Despite a troubled past linked to conflict, Iraq is establishing itself as the fastest-growing re-export market in the region.
"Iraq is one of the largest re-export markets of members outside the GCC," said the Dubai chamber. "Following a downturn in 2008, recovery immediately followed, with the value in 2010 posting a 96 per cent growth over the 2008 level."