Dubai: Any economic consequences of the political fallout between Iran and the GCC nations are likely to hurt Iran more, a leading UAE economic expert says.

Saudi Arabia on Sunday severed diplomatic ties with Iran following an attack on the Saudi embassy in Tehran.

The UAE on Monday downgraded its diplomatic representation to a charge d’affaires and ordered Iran to reduce the number of its diplomats in the UAE.

Dr Mohammad Al Asoomi, a specialist in economic and social development in the UAE and the GCC countries and a Gulf News columnist, said the deterioration in relations was likely to stay political in the near future, but any economic fallout would be relatively minor for GCC economies.

“I think Iran is making a big mistake by interfering in GCC internal affairs. Because of that I think the GCC is taking the right action against Iran.

“Of course, if Iran continues playing games it will affect mainly the Iranian economy. It has already been under sanctions for four years. During this time, if they have bad relations with the GCC economies, they will lose more. I don’t think it is a big problem for the GCC — our trade with Iran is limited; there are other opportunities.”

While the UAE has become one of Iran’s most important trade partners over the last 15 years, with non-oil export to Iran valued at $11.5 billion (Dh42.2 billion) in 2014, according to the National Bureau of Statistics, it is largely one-way traffic.

Just 5 per cent of Iran’s exports go to the GCC — 2 per cent each to Saudi Arabia and the UAE, and 1 per cent to Oman in 2014, according to the World Bank.

Iran has relied increasingly on importing goods from the UAE and China since the imposition of US and EU-led sanctions.

The proportion of its imports from the UAE rose from 14 per cent in 2000 to 39 per cent in 2014, according to the World Bank. Over the same period imports from China rose from 7 per cent to 33 per cent.

China, however, also imports a large quantity of Iranian goods, accounting for 41 per cent of Iran’s exports in 2014, in from 9 per cent in 2000, with total non-oil trade between the two nations valued at $13 billion in the first 10 months of 2014, according to Iran’s Isna news agency, making it Iran’s single largest trade partner.

“Iran already has economic problems. Their currency has lost more than 50 per cent of its value. Financial and monetary transactions have been stopped” under sanctions, Dr Al Asoomi said.

“For the time being I think it will remain political,” he added. “Economic relations between the GCC countries and Iran aren’t much developed.”