The UAE is "on course" to achieve its non-oil trade target of Dh4 trillion ($1 trillion) by 2031 amid policies such as the signing of comprehensive economic partnership agreements, the Minister of State for Foreign Trade has said.
The country’s non-oil foreign trade hit a record Dh1.24 trillion in the first half of 2023, up 14.4 per cent year on year, it was announced on Wednesday.
Non-oil exports grew by 11.9 per cent annually to Dh205 billion in the first six months of the year, which was more than the full-year levels recorded in 2017, officials said.
The country's non-oil exports with its top 10 most important trading partners alone rose by 22 per cent in the first six months of this year.
The UAE’s record-breaking trade results “underline the strength, resilience and agility of our national economy”, Dr Thani Al Zeyoudi said in a post on Thursday.
“New standards were set in every metric, with all-time highs achieved in exports, re-exports and imports," he said.
The total value of the UAE's re-exports hit a record Dh341 billion, up 9.9 per cent annually, while imports increased 17.5 per cent annually to Dh693 billion, the government media office said.
“We are on course to meet the targets set down by our leaders in the landmark We the UAE 2031 initiative, which seeks to deliver Dh4 trillion in non-oil foreign trade in the next eight years,” Dr Al Zeyoudi said.
Support from the private sector and the opportunities created by Cepa deals will help trade continue to “power the UAE’s economic ambitions”, he said.
“The UAE has signed a series of Cepas in recent quarters, including with Turkey, which are helping boost trade with key partners,” Daniel Richards, Mena economist at Emirates NBD, said in a research note on Thursday.
Turkey had one of the highest annual growth rates in the first half of 2023, at 87.4 per cent, with its share of the UAE's total non-oil foreign trade increasing to 4 per cent.
The UAE and Turkey signed a Cepa deal this year, which came into force on Thursday. The deal is expected to help push bilateral non-oil trade beyond $40 billion in the next five years, from $18.9 billion in 2022.
The deal has eliminated or reduced customs duties on 82 per cent of product lines, which account for more than 93 per cent of the value of bilateral non-oil trade, the Ministry of Economy said.
The UAE’s Cepa deal with Indonesia also came into force on Thursday, and is projected to boost the value of bilateral non-oil trade to more than $10 billion within five years, from $4.08 billion currently.
The agreement also seeks to raise the combined value of trade in services between the two nations to $630 million by 2030.
The UAE has also signed Cepas with India and Israel, and plans to sign 26 such deals.
Bilateral non-oil trade between the UAE and India reached $50.5 billion, a 5.8 per cent annual increase, in the first 12 months of the signing of the Cepa between the two countries, officials said in June.
The deal is hoped to help the countries boost that figure to $100 billion by 2030.
The UAE’s Cepa deals will support the country in achieving its ambitious trade targets, said Faisal Hasan, chief investment officer at Al Mal Capital in Dubai.
“I think it will further boost the [UAE’s] bilateral trade and it will be the non-oil sector that will drive the growth [in trading],” he said.
“The conditions are right and we are already seeing an increase in trade. Even if you look at global trade, it is also on the upswing.
"With all these fresh bilateral trade agreements and its growing importance in global trade, I think [the UAE is] on course to achieve its targets."
In the first half of the year, China remained the UAE’s top global trading partner, followed by India, the US, Saudi Arabia and Turkey. Rounding off the top 10 were Iraq, Switzerland, Japan, Hong Kong and Russia.
The UAE is currently China's second-largest trading partner in the Arab world with the value of non-oil trade between the two countries exceeding $72 billion in 2022, reflecting an 18 per cent annual growth.
Looking ahead, trade flows between China and the wider Middle East, North Africa and Turkey region are set to accelerate substantially in the coming five years, according to a new HSBC report.
“The Menat region is witnessing unprecedented economic change and transformation, led by Saudi Arabia and the UAE, and we’re seeing robust growth momentum driven by a vision to diversify economies and spearhead energy transition,” Stephen Moss, regional chief executive for Menat at HSBC Bank Middle East, said.
“This is an opportune time for Chinese investors and businesses to make inroads into the Middle East, to capture inbound and outbound investment opportunities.”