Non-oil trade hit a record AED 3.5 tn in 2023, Vice President Sheikh Mohammed bin Rashid Al Maktoum said early yesterday. Trade in goods was up 12.6% y-o-y to AED 2.6 tn, while trade in services hit AED 900 bn, Foreign Trade Minister Thani Al Zeyoudi also said. Exports of goods and services surpassed AED 1 tn for the first time, Al Zeyoudi added.

Non-oil exports rose 16.7% y-o-y to AED 441 bn during the year, contributing 17.1% to thecountry’s total foreign trade, up from 14.1% in 2019, Wam reports. imports fell 14.2% y-o-y to AED 1.4 tn, led by imports of gold, telephones, petroleum oils, cars, and diamonds.

The UAE’s services trade surplus doubled to AED 207 bn, driven by key sectors such as travel, ICT, and financial services. Re-exports also increased 6.9% y-o-y to AED 690 bn in 2023.

Non-oil foreign trade had a record 4Q: The UAE’s non-oil foreign trade hit a record AED 710 bn in 4Q 2023, up 16.3% y-o-y, the state news agency said. Non-oil exports increased 39.3% y-o-y AED 132.2 bn during the quarter, and have consistently exceeded AED 100 bn since 1Q 2023.

Trade agreements drove record growth: Non-oil foreign trade with the UAE’s 10 biggest trade partners increased 26.9% in the past year, with a 103% rise in trade with Turkey following the September implementation of the trade agreement between both countries, a 47% y-o-y increase in trade with China, and a 20% y-o-y growth with the United States, Al Maktoum said.

Looking ahead: “CEPAs are going to play a major role in our foreign trade numbers moving forward,” Al Zeyoudi told Reuters.

NON-OIL + OVERALL GDP TO CONTINUE TO GROW IN 2024-

Regional tensions are expected to have limited impact on economic growth, withthe UAE’s non-oil GDP expected to reach 4.3% in 2024, but prolonged oil production cuts could slow overall growth to 3.1%, according to the Institute of International Finance's (IIF) baseline scenario outlined in their latest report (pdf) on the global economic fallout of a Middle East regional war. The IIF also expects real GDP growth to come in at a 3.1% clip under this scenario.

Non-oil GDP outlook is in line with other analysts’ forecasts: The International Monetary Fund sees the non-oil sector maintaining its 4% growth in 2024, while Oxford Economics expects non-oil GDP to grow 3.8% in 2024. The Finance Ministry is the most optimistic, seeing non-oil GDP growing at a 4.7% clip.

Forecasts for overall GDP are much more varied: The World Bank expects to see 3.7% growth in 2024, while The Arab Monetary Fund sees the GDP growing at a 4.3% clip. S&P Global said that the economy could accelerate to more than 5%, while the Finance Ministry sees it growing 5.3% and the Central Bank of the UAE expects a higher 5.7% clip.

The overall impact on the six GCC countries is expected to be moderate, manifesting through a slight uptick in inflation, a decrease in tourism, and subdued private investment.

What the foreign trade minister has to say about Red Sea disruptions: “We think our country will not be disturbed with that… we are in a good position, and it’s about how we are resilient, and the adaptability of the system here to face the challenges facing the world and the region,” Al Zeyoudi told Reuters.

Tourism in the UAE could be impacted if regional tensions drag, according to the IIF’s 30% likelihood pessimistic scenario, which sees the UAE’s economy growing 1.5% in 2024, with non-oil real GDP growing 3.1%. While the GCC countries are unlikely to participate in future wars, their economies could potentially suffer from disruptions in oil and LNG shipments, offsetting gains from higher oil prices, the report reads. This could manifest through a wider fiscal deficit and deteriorated current account balance.

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