Exports to UAE of major EU suppliers slowing down

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Data on exports of major EU suppliers of Dubai, presented in Table 1, confirmed this observation.

Exports of UK to UAE declined from more than EUR8.1bn in 2005 to EUR5.3bn the following year, a decline of 35%.

Further decline of 25% was posted in 2007, leading to an export value of EUR3.9bn. Exports of Finland to UAE likewise declined at an average annual rate of 13%, from EUR1.1bn in 2005 to EUR826m in 2007.

France's exports had been relatively stable during the period, posting a slight decrease in 2006 which was reversed the following year by a 7% increase, for an average growth of 3%.

Similarly, Hungary's exports declined by 18% in 2006, so that despite the 7% growth in 2007, the period average growth remained negative.

Despite the reported increases in exports to UAE of Germany, Italy, Belgium and Netherlands, overall growth had been negative in 2006.

The 6% increase in 2007 negated the trend, leading to a very slight annual growth of only about 0.5%.

Export of electrical and electronic equipment has been dropping
Table 2 shows that electrical and electronic equipment had been the largest exports of the selected EU countries to the UAE.

Value of exports for the 3-year period amounted to EUR17.9bn, or more than a quarter of the total value of exports to UAE.

However, double-digit rates of annual declines were noted, at 39% in 2006 and 23% in 2007, for an average of 31%.

The group had been largely responsible for the overall decline in 2006 and for only a very slight growth in 2007.

Although exports of Pearls and precious/semi-precious stones and metals and jewelleries also slowed down in 2006, the decline had been very slight and was reversed the following year, for a positive growth of 27%.

The second largest exports of the selected EU countries to UAE were Machinery and mechanical appliances, reaching a 2-year total of EUR14.7bn and accounting for a share of 22%.

Growth rates, though significantly lower in 2007, had been double-digit, for an annual average growth of 21%.

Together, exports of these product groups accounted for almost half (48%) of the countries' total exports to UAE.

Other major exports during the 2-year period were Transport equipment (EUR5.1 bn), and Aircraft (EUR4.0 bn).

While exports of the former had been accelerating at an annual average growth of 16%, exports of the latter had been almost stationary at an annual average growth of only 2.3%.

Exports in 2008 show continuity of the pattern
Exports of the EU countries to UAE for the first 5 months of 2008 showed indications of continued pattern.

Table 3 shows that, while on the average, Jan-May 2008 exports to UAE already represented 43% of the average annual value of exports for the period 2005-2007, corresponding figures for Finland, France and UK were significantly lower at 34%, 36% and 29%, respectively, indicating continued slowdown.

On the other hand, exports of Germany, Hungary and Italy already crossed the 50%-mark, implying expectations for higher exports to UAE of these countries in 2008.

The continuing weakened performance of UK in the UAE import market in 2008 had resulted to ascent of Germany as the largest supplier of UAE's imports from EU, with the 5-month total export value of EUR2.6bn.

Following, with total 5-month exports of EUR 2.0bn was Italy. UK, which had been the largest supplier during the last 3 years, had slid down to third place.

The decline of UAE's imports from UK, and Finland had been largely due to the decline of the EU countries exports of electrical and electronic products to the UAE, with the latter expanding its import markets significantly to large Asian suppliers of the products, including Japan, China and South Korea. On the other hand, France's major exports to UAE, consisting of Aircrafts and parts, had not grown significantly since 2005.

The continuing aggressiveness and increasing competitiveness of major Asian suppliers, coupled with relative stability of their currencies have made these markets more attractive to UAE.

In addition, the euro has been appreciating against the US dollars.

With the dirham pegged to the US dollar, US machineries and equipment have become relatively cheaper.