Soaring commodity prices and strengthening links with fast-growing overseas markets helped bolster the value of Dubai's non-oil trade by 31 per cent in the first two months of the year.
Exports and re-exports recorded the biggest gains during the first two months compared with the same period last year, as non-oil trade reached Dh113 billion (US$30.76bn), data released yesterday by Dubai Customs show.
"The rise is due to a combination of price increases and volume increases," said Dr Ashraf Mahate, the head of export market intelligence at Dubai Export Development Corporation. He said rising gold prices played "quite a substantial role in the increase but rises in the price of base metals have also contributed".
Dubai's trade has rebounded strongly from the global financial crisis, helping to bring in revenues to the emirate as other sectors such as property struggle.
Gold is one of Dubai's major trading products. Prices of the precious metal surged 6 per cent in February to post their biggest one-month rise in six months. Investors flocked to gold as a safe haven from US dollar weakness and turmoil in parts of the Middle East. As a centre for the refinery and retail of gold, Dubai benefited from the rising demand. It also gained from its status as an important re-exporter of the precious metal.
A rally in the prices of aluminium also helped the emirate because the base metal is an important export through Dubai Aluminium Company (Dubal) and Gulf Extrusions. Higher food prices added to the rising value of trade.
The value of total exports rose 48 per cent during the first two months of the year compared with the same period last year, accelerating to Dh13.2bn. Re-exports rose 40 per cent over the same period to reach Dh29.6bn. India, Iran and Iraq led the list of re-export markets.
Growing domestic consumption pushed imports up 26 per cent to Dh70bn.
"Commodity prices and the continued resilience of growth in Asia along with better economic prospects in Dubai are likely to be the drivers of improving trade," said Raza Agha, a Middle East and Africa economist at the Royal Bank of Scotland.
Almost a third of the emirate's total trade was with India as rising output in the economy there benefited Dubai. Behind India, the second-highest exporter to Dubai was China ahead of the US. India, Singapore and Thailand were the largest export markets for Dubai.
Investments made by Dubai firms during the global financial crisis to open overseas markets were paying dividends now, said Dr Mahate.
"Firms realised the only way to survive the downturn was to venture overseas and they have become more successful since starting that process," he said.