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UAE foreign trade set for record surge

The UAE’s non-oil foreign trade for the whole of 2021 is projected to record a higher growth rate than the pace of surge registered during the first six months on the back of a robust global recovery from Covid-19 being witnessed in the second half of the year, trade analysts said.

In the first six months, the total value of the UAE’s non-oil foreign trade jumped to $245 billion, marking a 27 per cent rise compared to H1 2020 and indicating a rapid recovery in the country’s return to a growth trajectory.

Trade analysts at Fitch Solutions forecast the UAE’s current account surplus to increase from 5.8 per cent of GDP in 2020 to 7.7 per cent of GDP in 2021 and 7.9 per cent of GDP in 2022.

They said that the upbeat forecast was based on their expectation for a gradual recovery in services and goods exports, as Expo 2020 Dubai drives a revival in the tourism sector and the recovery in the global economy supports non-hydrocarbon exports.

The record surge in the UAE’s foreign trade in the first half of 2021 surpasses the global trend. In the third quarter of 2021, global trade, which was battered by the pandemic, hit a record high and is expected to rise 23 per cent to reach $28 trillion for the full year, according to United Nations Conference on Trade and Development (Unctad). Global trade growth remained strong during the year and stabilised in the second half, rising 24 per cent on an annual basis in the third quarter and significantly higher than pre-coronavirus levels.

"The positive trend for international trade in 2021 is largely the result of the strong recovery in demand due to subsiding pandemic restrictions, economic stimulus packages and increases in commodity prices," Unctad said.

In the UAE, the total value of foreign trade in the past five decades amounted to some $9.32 trillion as the country’s trade balance from 1971 to 2020 recorded a surplus of nearly $1.3 trillion, Unctad data shows.

The value of the UAE’s foreign trade increased 473 times from $1.15 billion in 1971 to $542.02 billion by the end of 2020.

Dubai, which accounts for a major share of the country’s non-oil foreign trade posted a 31 per cent growth to $196.66 billion in the first half, reinforcing the emirate's status as one of the world’s fastest-growing business hubs.

The numbers support the goal of the 10x10 programme (one of the nation’s "Projects of the 50" initiatives) to increase the UAE’s exports to 10 global markets by 10 per cent annually, the Dubai Media Office has said.

According to Dr Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, the non-oil foreign trade data for the first half of 2021 revealed significant and promising growth in the total volume of trade over the past two years, despite the pandemic’s impact on the global trade movement.

He said the significant growth in non-oil exports “is a clear indication of the rapid recovery and the return to the growth trajectory and the overall growth in the country’s foreign trade movement in general and in promoting national non-oil exports particularly.”

The cumulative balance of foreign direct investments (FDI) into the country rose from $7.8 million in 1971 to some $20 billion by the end of 2020, Unctad data shows.

The UAE’s foreign trade over the five decades varied between exports by 57 per cent worth $5.3 trillion and imports by 43 per cent, worth $4.01 trillion. Exports increased 380 times, rising from $842 million in 1971 to $319.3 billion by the end of 2020, while imports rose 730 times from $309 million to $225.7 billion at the end of 2020.

According to Unctad figures, the value of foreign trade increased 28 times by the end of the first decade, after the formation of the UAE, to $32 billion and nearly 33 times by the end of 1991 to $38.2 billion and nearly 74 times by the start of the 2000s to $85.7 billion, and 462 times by the end of the fourth decade to $532 billion. The year 2019 was the best year, in terms of the value of foreign trade, totalling $657.3 billion, followed by 2018 with $649.4 billion, and 2013 with $644.8 billion.

issacjohn@khaleejtimes.com