Kippreport gets insights from Mike Belk, CEO and president of Daimler Middle East and LevantMarch 26, 2015 12:02
Dubai Foreign Trade Jumps 22 Percent in 2011, Iran Up
Foreign trade rises to record $300 billion; Customs forecast 20 percent growth in 2012; Direct re-exports to Iran hit, but still up 29 percent in 2011
April 19, 2012 9:25 by kippreport
Dubai’s foreign trade jumped by a record 22 percent in 2011 driven by strong flows with Asia that offset the impact of international sanctions against Iran, the emirate’s traditional trade partner, data from the Dubai Customs showed on Wednesday.
The United Arab Emirates member saw its foreign trade volume rising to a record 1.1 trillion dirhams ($300 billion).
The figure includes direct, free zone and warehouse trade in the Gulf Arab business hub, which has been gradually recovering from the impact of the 2008-2009 debt crisis.
Dubai Customs Executive Chairman Ahmed Butti Ahmed said the emirate has benefited from market openness and its modern infrastructure, adding strong trade growth was expected to continue this year.
“The (forecast) increase of 20 percent is based on what we achieved in the first quarter of 2012 that’s where we came up with that figure. Demand from different countries is increasing, population is increasing, needs are increasing, it’s natural,” he told reporters after releasing the 2011 numbers.
Asked whether such a prediction was not too optimistic given signs of economic slowdown in emerging economies such as China, one of Dubai’s top trade partners, and sanctions targeting Tehran’s disputed nuclear programme, Ahmed said: “We believe that it will not have that strong impact on us.”
No other detail on first quarter figures were given.
Dubai’s direct trade, which makes up 64 percent of the total, soared by 22 percent to 700 billion dirhams in 2011.
Direct imports rose 21 percent to 442 billion dirhams, exports jumped 44 percent to 98 billion, while re-exports grew 18 percent to 161 billion, the data showed. Some 6,000 containers on average leave Dubai’s ports every day.
Re-exports show goods imported to Dubai and then exported to another destination. They also reflect the diversion of trade from elsewhere in response to sanctions on Iran, something the U.S. has increasingly sought to restrict.
Dubai’s direct re-exports to Iran grew 29 percent to 31 billion dirhams last year, the fastest growth rate over the past five years, although figures show a marked slowdown in the last three months of 2011, according to Reuters calculation.
“We are in line with United Nations embargo. Whatever is not allowed to be exported we do not export. We stopped that,” Ahmed told a news conference at the customs’ ship-shaped building.
“There is an impact because the Iranian currency went down and goods became so expensive for people to buy. Plus there are also difficulties in transferring money through banks, that also has a very strong impact,” he said.
The emirate’s total direct trade with the Islamic Republic stood at 36 billion dirhams in 2011, customs said, adding the increase in trade was due to high global gold prices as the metal accounts for a large proportion of the trade.
Other items included goods such as food, clothing, cars, carpets, spare parts, jewelry and diamonds. It did not give more details. Iran accounts for a fifth of Dubai’s direct re-exports.
With the exception of Dubai, Gulf Arab trade links with Iran are minor. Iran’s energy-reliant economy is reeling from sanctions aimed at stifling its lucrative oil exports.
The IMF said in May 2011 that sanctions against Tehran existing at that time could shave off 0.2 to 0.7 percent of UAE GDP annually.
Dubai, which accounts for nearly a third of the UAE’s GDP, is aiming for economic growth of 4.5 percent this year, up from an estimated expansion of more than 3 percent in 2011, the emirate’s top official said in February.
($1 = 3.6730 UAE dirhams)
(Reporting by Martin Dokoupil; Editing by Reed Stevenson)