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Re-exports may Drop as Global Slowdown Hits Trade

ABU DHABI - The UAE’s re-exports may drop as the world trade has been hit by the global economic slowdown, said Sultan bin Saeed Al Mansouri, the Minister for Economy. The minister said that if re-exports contract the country’s Gross Domestic Product, or GDP, would also suffer.

The minister was commenting on the negative effects of global economic downturn at a ceremony, which was held to sign an MoU on Trade, Technical and Economic Cooperation with Lord Peter Mandelson, the visiting British Secretary of State for Business, Enterprise and Regulatory Reform.

The minister said that the oil prices have already gone down to $50 a barrel. Oil exports contributed 38 per cent to the GDP in 2008, he said. Despite the financial situation in the rest of the world, goods exported and re-exported from Dubai hit Dh240 billion last year. Sultan bin Saeed Al Mansouri was optimistic that the GDP figure will improve.

Speaking on the economic contraction in the wake of global financial crisis, the minister did not offer any forecast. “I don’t like to give percentage as every month has its own percentage,” he said.

On the issue of liquidity squeeze, which has hit the nation’s financial industry, the Minister of Economy said that the government is closely monitoring the situation. He said that after pumping in Dh120 billion into the financial sector last year, the government was now monitoring the liquidity situation on a weekly basis.

The minister said that in coordination with the Central Bank of the UAE, a high level government committee is monitoring all the economic sectors including the liquidity within the banking system. “We are also monitoring bank’s capital adequacy ratios and other ratios,” he added.

Al Mansouri said that government has set up an effective system to identify and address the challenges accordingly.

In reply to a question regarding food prices, he said that in cooperation with hyper markets and cooperative societies across the country, government has managed to bring down the prices of food items in the past few months.

Earlier, Al Mansouri and the visiting British Secretary of State for business, enterprise and regulatory reform Lord Peter Mandelson signed a Memorandum of Understanding to boost bilateral trade and economic ties.

Al Mansouri said that the MoU will support the UAE and UK joint economic committee, which plays an instrumental role in promoting economic cooperation. Lord Peter Mandelson said that the agreement will frame future, economic and commercial relations with the UAE, the second largest trading partner in the Middle East.

Mandelson said that the UK is willing to play its role in the economic development of the UAE. The British minister, who is heading a 15-member trade delegation, said that he discussed wide ranging issues with the UAE leadership.

The delegation included companies from a broad range of sectors, including healthcare, construction, transport, power, oil and gas, water, banking and the security sector.

haseebhaider@khaleejtimes.com