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Saving grace: Will Dubai’s growing non-oil exports save the day?
With an expected 36 percent rice this year, Dubai's non-oil export is growing due to political stability and new trade links. So will this be the emirates' saving grace?
November 28, 2011 4:09 by Reuters
Dubai’s non-oil exports may jump 36 percent in 2011 and grow at the same pace next year, boosted by political stability and new trade with East Africa and Central Asia, a government official said, although analysts see a slowdown in 2012 on the global economic outlook.
The emirate, which lacks the oil wealth of neighbouring Abu Dhabi, saw economic output shrink by 2.4 percent in 2009 after the global financial crisis burst its property bubble. Its economy, recovering from massive debt restructuring at a state-owned conglomerate, expanded by 2.8 percent last year.
Dubai, one of seven members of the United Arab Emirates which accounts for 28 percent of the OPEC member’s economy, is seen benefitting from political stability, growing tourism to its landmarks such as the world’s tallest tower Burj Khalifa or an indoor ski slope, and new emerging trade partners.
Saed al-Awadi, chief executive of the Dubai Export Development Corporation (EDC), said he expects exports to grow 36 percent in 2011.
“Next year, (exports) will be within the same figure which is 36 percent, it will continue as good as this year’s growth,” he told Reuters on the sidelines of an exporters forum.
“Our non-oil exports in the first half of 2011 are 36 percent higher than in 2010, from 33 billion dirhams ($8.99 billion) to 45 billion dirhams,” Awadi said.
Last year, he forecast Dubai’s non-oil exports, which account for around 13 percent of the overall trade flows, would grow 20 percent in 2011.
However, with the euro zone debt crisis and a slowdown in China set to hurt growth wordwide next year, Awadi’s forecast may be optimistic.
“Given the difficult global economic outlook next year and our expectation of significantly lower growth in trade volumes, I wouldn’t expect to see the pace of increase match that of this year,” said Simon Williams, chief economist for the Middle East and North Africa at HSBC.
Dubai’s central geographic location, airport and seaport infrastructure, business environment and political stability were driving exports growth, Awadi said.
“We are developing new markets including East Africa and Central Asia, these are the two new markets for 2012,” he said.
Trade with conventional markets such as India, the Gulf Cooperation Council countries, Middle East, North Africa and South Asia would continue to grow, he said.
Imports increased by 21 percent to 214 billion dirhams in the first six months of the year, Awadi said, citing data from Dubai Customs.
Re-exports rose to 86 billion dirhams in the first half of the year from 69 billion in the same period in 2010. Dubai’s non-oil trade data exclude trade in its free zones.
Concerns about Dubai’s liabilities have eased since state-owned firm Dubai World reached a deal last year to restructure almost $25 billion of debt.
The UAE, which enjoys the world’s sixth highest per capita income of $47,400, has avoided popular unrest, which challenged governments in nearby Bahrain and Oman in February and March.
Analysts polled by Reuters in September expected the UAE economy to expand by 3.8 percent in 2011 and at the same pace in 2012 helped by robust oil prices, but the European debt crisis and weak U.S. growth may dent performance next year. (Reporting by Martina Fuchs)