Recently released statistics confirm an established fact, namely that of the UAE embracing the free trade principle in general and imports in particular. In essence, the UAE resembles the US in being receptive to foreign trade. Many countries including China enjoy trade surpluses with the US.
The UAE enjoys a surplus in its trade balance and as such in its current account by virtue of being a key exporter of oil to international markets. Steady oil prices for several years in a row have been helping the country register comfortable surpluses in its external accounts.
In fact, the UAE stands out for being exceptionally receptive to non-oil imports. Statistics released by the Federal Customs Authority, an official entity, showed that the country's non-oil trade rose by 23 per cent last year, undoubtedly a significant gain in a span of one year. In other words, non-oil trade rose by a hefty $47 billion (Dh172.61 billion) to notch a record $253 billion.
At $164 billion, imports account for a big chunk of the trade, with the balance of $89 billion representing exports and re-exports. The fact that imports grew by a hefty 24 per cent is indicative of the UAE's success with the emirate of Dubai staying true to its rule as a primary regional hub for trade. A sizeable volume of the imports eventually makes it into export orders to countries in the region and beyond.
International outlook
Interestingly enough, India has emerged as the largest source and recipient of non-oil trade and for a good reason. And the reason is none other than gold, as Dubai in particular continues to solidify its position as a premier centre for jewellery trading activities. Switzerland and Saudi Arabia followed India as primary destinations for exports last year, again demonstrating the UAE's broad international outlook.
Regional troubles associated with the Arab Spring have to an extent solidified Dubai's position as a primary hub for regional trade. In reality, this notion only strengthens the significance of the UAE's economy on the international scene.
It goes to the UAE's credit that it has demonstrated leadership in shouldering the responsibility of serving as a primary trading centre. This is evidenced in the fact that it boasts four different carriers, namely Emirates, Etihad, Air Arabia and flydubai, which together provide connections to cities across the world.
The country sustained a rise of at least 20 per cent in each month last year, suggesting that the growth level was not a one-time phenomenon.
Strong fundamentals
Among other things, the trade growth serves as evidence of the UAE's capability to sustain solid improvement in its economic fundamentals despite all global economic challenges notably the Euro's debacle.
Other achievements include registering a solid $62-billion rise in the gross domestic product (GDP) in current terms to reach a record $360 billion. This figure strengthens the UAE's position as the second-largest GDP in the Arab world after Saudi Arabia. Certainly, a significant amount of credit for this achievement rests with firm oil prices and production.
GDP indicator
It is probably fair to assert that budgetary deficits reflect a tendency to live beyond means but the same is not true when it comes to trade imbalances.
In effect, a deficit in trade balance is a sign of a country being receptive to foreign trade with all the positives thereof for consumers with regard to choices, prices, competition and services.
The UAE and the US stand out as models of countries being open to international business. Others need to follow suit.
The writer is a Member of Parliament in Bahrain.
