x Abu Dhabi, UAETuesday 25 July 2017

Dubai trade weathers storm

Regional unrest has taken its toll on Dubai's re-export market, new figures show.

The re-export of goods by members of the Dubai Chamber of Commerce to countries affected by recent turmoil in the region dropped up to 30 per cent last month.

However, despite the upheaval, total outward trade rose by 8.3 per cent to Dh17.6 billion (US$4.79bn) last month compared with the same period last year.

"Re-exports to Libya, Egypt, Tunisia and Yemen are down," said Hamad Buamim, the director general of the Dubai Chamber of Commerce and Industry. "We expect trade to these countries to rebound when conditions improve."

The overall rise in exports and re-exports suggest the emirate's status as an important regional trading centre is holding up relatively well. However, last month's performance represents a dip from a 24 per cent increase in January.

"Dubai is a safe haven," said Mr Buamim. "This confirms our expectation that 2011 will be an extension of the final quarter of 2010 in terms of strengthening tourism, trade and retail."

Upheavals have disrupted trade with Egypt and Tunisia, the former an especially important trading partner with the emirate.

Embroiled in civil war and struck by international sanctions against senior government figures and companies, Libya's trade market has suffered in recent weeks.

Shipping officials have said the imposition of sanctions by the EU, the US and the UN would hinder shipping activity, which the country relies on to transport oil to foreign markets and to import goods.

Yemen has also experienced intermittent turmoil from protests.

Bahrain, also the scene of current unrest, had relatively small trade links with Dubai, he said.

Financing trade deals with affected countries was expected to become more expensive as uncertainty persisted, said bankers. Export Credit Insurance of the UAE said last month it intended to raise premiums for new exporters to some countries by up to 20 per cent. If other credit insurers follow, transport and storage costs could also edge up as price increases are passed along the supply chain.

With the outlook cloudy for some regional export markets, Dubai companies are increasingly 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. "The growth potential in Iraq is huge and we are positioning ourselves to be the top for trade," said Mr Buamim. "Turkey and Iran are ahead of us [the UAE] at the moment."

Saudi Arabia was still Dubai's biggest re-export market in the region, he said.

In contrast, Dubai's trade with Iran was being crippled by international sanctions.

After dropping dramatically at the end of 2008 and in early 2009, global and regional trade began to regain lost ground at the start of last year.

A recovery in UAE trade has come in tandem with signs of a strengthening private sector.

Business activity edged to a new peak last month as private-sector commerce strengthened, despite unrest across the Mena region.

HSBC's headline purchasing managers' index last month rose to a peak of 54.3, up slightly from 54.2 in January.

 

tarnold@thenational.ae