According to the International Monetary Fund (IMF), the global fall in oil prices and the tumultuous security situation in the Levant and North Africa have adversely affected trade within the Middle East and Africa. The combined export of goods and services from the region fell by 20 per cent from $1.5tn to $1.2tn this year.
The GCC is expected to see exports fall by 23 per cent when compared to 2014 and the MENA region as a whole is set to import 2.7 per cent fewer goods and services, importing $1.2tn in 2015.
However, belief that oil prices will rise in 2016 have raised hopes, according to Badr Jafr, Chairman of the Executive Board of Gulftrainer, a privately owned container port operator owned by Sharjah’s Crescent Enterprises, “The past decade has seen a huge six fold increase in trade . . . and we have diversified trading partners too, with the balance shifting to the emerging world,” said Jafar, “The missing opportunity is trading with one another – that’s where we need to improve.”
The key, Jafar stated, was investment in trade infrastructure, allowing countries to broaden their economic base and to ensure the growth of business between Africa, Asia and the Middle East. The UAE in particular has recently been highlighted by HSBC as an important hub in bolstering regional trade between Asia and Africa, the finance house’s May Trade Forecast Report highlighted the importance of the Emirate’s knowledge-based, and increasingly diversified, economy.
According to HSBC, the UAE’s expanding productivity will drive economic growth by approximately 3.5 per cent through to 2030, of interest was the expectation that non-oil output could account for between 69 and 80 per cent of the Emirate’s GDP by 2021. According to the bank developing economies, including Africa, will see increased levels of trade and, “So-called ‘south-south’ trade will become increasingly important in the global context, as these countries focus their efforts towards other developing economies with a strong potential for rapid expansion of a middle-class consumer market.” However, while HSBC appears bullish about the prospects of a middle class market, various large multinationals, including Nestle and Coca Cola, have been forced to reduce operations in Africa due to lower than anticipated sales, largely due, the firms claim, to the lack of an emerging middle class.
Nevertheless, the indicators for 2016 and beyond appear to be promising and the Middle East, and the UAE in particular, are well positioned to take advantage of burgeoning trade between the MENA region and Asia.