The Dubai Financial Market. The UAE GDP growth reached 4.1 per cent in 2011 and is expected to reach 4.5 per cent by the end of 2012. Image Credit: Pankaj Sharma/Gulf News Archives

Abu Dhabi: The volume of trade exchange between the UAE and the European Union (EU) is expected to be stable and at its 2011 levels due to economic recession prevailing in the EU nations, said economists.

Dr. Numan Ashour, a chief economist and analyst at the CNBC Arabia, told Gulf News that the volume of trade between the UAE and the EU in 2012 will be similar to that in 2011 at around Dh147 billion.

Dr. Mohammad Amerah, economic adviser at Sharjah Chamber of Commerce and Industry, told Gulf News “the trade exchange has been influenced by the high prices of oil this year and the decline of production in the EU markets.”

Stating that the trade relations between the EU and the UAE have grown and evolved considerably over the past years, Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, said following his meeting with 18 EU ambassadors to the UAE: “The volume of trade exchange during the first half of the year 2012 reached around Dh74.397 billion compared to Dh 146.772 billion in 2011.”

Al Mansouri urged the EU nations to remove the obstacles that affect the flow of trade between the two parties, noting that the imposition of an additional fee on UAE products by Brussels, which preceded charges on plastic products as well as the move for carbon taxing on national carriers, is not in line with the goal of developing future trade relations between the two parties.

He highlighted the importance of further coordination to modify these procedures to avoid a situation that could lead the UAE to take retaliatory action to protect its products.

“The UAE is currently working on a number of laws with regards to small and medium enterprises, intellectual property rights and foreign investment, which, once approved, will inevitably enhance the business atmosphere in the UAE,” said the minister.

Al Mansouri added that the UAE GDP growth reached 4.1 per cent in 2011 and is expected to reach 4.5 per cent by the end of 2012.

Al Mansouri said that such figures and indicators reflect the openness of the UAE economy to world markets in overall trade activity, including imports, exports and re-exports.

“The UAE can play an important role in petrochemicals, aluminium and steel industries and looks forward to enhancing cooperation with the EU in boosting these industries, especially considering that the UAE has the infrastructure to become a regional hub for exporting these metals, besides leading the region in producing auto parts,” added Al Mansoori.

Ashour said that the reason for the stability of trade volume in 2012 between the EU and the UAE can be attributed to three main reasons.

“Europe is expected to pass through a dark tunnel in the coming year and a deep recession will be very remarkable, leading to the shutdown of many factories. This will also reflect the trade exchange between the UAE and these countries as demand on oil will plummet since its prices have hiked since 2011 from $97 per barrel to $108 per barrel,” said Ashour.

He added that billions of euros have been transferred from the EU to other safe haven countries such as some of the emerging markets in China, the GCC, and even the USA which has started witnessing indicators of economic progress.

The UAE called on the EU to enhance economic ties and to boost mutual trade, benefiting from the potential investment opportunities.

“UAE’s future economic policy will focus on tourism, industry, trade and innovations which are vital areas in building a knowledge-based economy,” said Al Mansouri,

“Tourism will be an important sector for us in the future and this will include family tourism and regional tourism as the UAE possesses an excellent infrastructure to reinforce this sector through its national carriers, strong hospitality sector and the new city announced recently by Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai,’’ Al Mansouri said.

The minister pointed out that industry and trade are other significant sectors and efforts will be made to enhance investments in these areas.

“Trade is a key sector as it is closely associated with the UAE’s strategic position and the role it can play to strengthen and activate the economic cycle between the European Union, East Africa, and the former Soviet Union countries,” said Al Mansouri.

He explained that the UAE could be a vital link between the countries in these locations, boosting regional and international trade as well as the UAE National Economy.

“Innovation will be another priority area, and it will involve education development at all levels, including higher education and scientific research and stimulating innovation through the establishment of specialised centres in this area,” said the minister.