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Global slowdown looms over UAE despite import growth
Imports rose 22.3 percent year-on-year in May even as non-oil exports and re-export growth slows sharply.
September 6, 2011 9:00 by Reuters
The UAE’s non-oil import growth more than doubled to 22.3 percent year-on-year in May compared with April but exports and re-exports slowed sharply, data showed on Sunday, highlighting risks of global slowdown to the OPEC member’s economy.
Non-oil foreign trade in the UAE, the world’s No.4 oil exporter and key Gulf business hub, picked up strongly early this year helped by economic expansion in Asia following local debt woes in most of 2010.
In May, import growth accelerated from 11.0 percent seen in the previous month after quickening steadily since December, showing recovery in domestic demand.
However, growth in re-exports, which account for 22 percent of the overall UAE non-oil trade, halved to 7.0 percent in May from 14.4 percent in the previous month, data from the UAE Federal Customs Authority showed.
Non-oil export growth fell to 21.4 percent year-on-year from 58.8 percent in April. The authority does not provide figures for oil exports, which account for more than 40 percent of the total.
“Despite the strengthening in domestic demand, the weak real-estate related construction activities is weighing down upon the recovery in real imports’ growth,” Beltone Financial said in a note.
“The situation has improved, markedly, in 2011 … with volumes of imports, non-oil exports and re-exports volumes seeing a notable pace of year-on-year growth during the first quarter of 2011,” it said.
RIPPLE EFFECT OF GLOBAL SLOWDOWN
However, analysts said growing uncertainties over the fragile global economic recovery and a slowdown in demand may pose a significant downside risk to the UAE’s economic outlook going forward.
“The UAE is the more integrated into the global economy than any of its regional peers. Any sustained downturn in global capital flows, or weakening international demand for goods and services will weigh more heavily here than elsewhere,” said Simon Williams, chief economist for MENA at HSBC in Dubai.
Economic growth is stagnating in Europe and cooling slightly in China, business activity data showed in August, fuelling concern about the risk of a global slump as Western governments struggle to cope with their debt problems.
The World Bank’s president said on Saturday the world economy was stepping into a “new danger zone”, urging Europe and the United States to tackle their debt problems.
In 2010, domestic consumption accounted for nearly 68 percent of the UAE economy, at $297 billion the second largest in the Arab world after Saudi Arabia.
Dubai, which had been reeling from a property bubble burst and debt troubles in…
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