Businesses in the UAE were more confident about the outlook for trade than companies from anywhere else, according to a survey by HSBC.
Eighty-three per cent of UAE respondents to the HSBC Trade Confidence Index expected trade volumes to rise over the next six months, with 49 per cent anticipating a significant pickup in trade.
The index, which gauges the views of traders every six months, jumped nine points to 141, the highest score for the UAE since the survey started in 2009. A score above 100 denotes a positive reading.
The global average in the 23-nation survey was a score of 113.
The score for the United States was 115, the country’s highest result since the survey’s inception.
Singapore and Canada were also at 115.
“While oil and demand supply will continue to be crucial in determining the UAE’s trade position, we also expect to see infrastructure and construction, tourism, retail and government investment in technology to be the main drivers for UAE,” said Nicholas Levitt, the head of commercial banking for HSBC Bank Middle East. “Dubai’s successful bid to host Expo 2020 will also have a key role to play in this as the event catapults the country into the centre of the global stage.”
The rebounding confidence in trade reflects sustained momentum in the economy as the property market rebounds, while tourism, retail and infrastructure investment remain strong. GDP growth is forecast to reach 4.5 per cent this year, according to the IMF.
The survey suggests firms remain optimistic despite recent wobbles in some key emerging market trading partners. In recent months, growth has slowed in both China and India. The survey was conducted last November and December, before respondents could give their thoughts on any negative effect from the diplomatic spat between Qatar and the UAE, Saudi Arabia and Bahrain.
Globally, trade confidence remains patchier, with a stronger recovery in advanced nations offset by sluggish growth in emerging markets.
India and China will remain the UAE’s fastest-growing trade routes until 2030, with growth at 10 per cent each year, according to the report. Turkey and Saudi Arabia will also become increasingly important sources of demand, it said.
By 2030, the report forecasts India will overtake Japan to become the UAE’s leading export destination. China, it says, will also rise, from the fifth to the third-most important export destination.
The Government is working to diversify the UAE’s export mix away from oil to include items such as aluminium, petrochemicals and technology goods.
Elsewhere in the region, trade confidence among businesses in Saudi Arabia ebbed slightly. Still, businesses remain positive that trade volumes will rise in the short term, with the kingdom scoring 126 points.
China, India and South Korea will remain the kingdom’s top three export destinations. Confidence in trade volumes among businesses in Egypt slipped, mainly due to the political instability. India would continue to be Egypt’s top export destination until 2030, with the US, Turkey and Saudi Arabia remaining significant trade partners.
tarnold@thenational.ae
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