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US exports to Arab world set to hit $45 billion in 2007

DUBAI — US exports to Arab world are set to reach $45 billion in 2007, a special report from the National US-Arab Chamber of Commerce, said.

"2006 was a record year for US exports to the Arab world, and 2007 is expected to shatter that record," it said.

“We are charting new territory in America’s trade relations with the Arab world,” said David Hamod, president and CEO of the National US-Arab Chamber of Commerce (NUSACC). “The 2006 numbers are unprecedented, and the outlook for 2007 looks even brighter.”

Sales of American merchandise to the Arab world in 2006 topped $35 billion, a 28 per cent increase over the previous year. The outlook for 2007 is even more promising, with estimated US sales surging to $45 billion, according to the Institute for Research: Middle Eastern Policy.

US-Arab bilateral trade reached $109 billion in 2006, an increase of 25 per cent over 2005 levels. Total Arab market imports are expected to reach $405 billion, an 11 per cent increase over year 2006.

According to the report, the single most important factor in the rise of US exports in 2006 was the depreciating dollar, which made US goods very competitive against comparable products from Europe, Asia, and elsewhere. In 2006, the value of the dollar fell about 10 per cent against the euro, and a further decline is taking place in 2007. The continuing weakness of the dollar will cause US global exports to grow by double digits throughout 2007, according to the Economist Intelligence Unit.

The total US deficit in goods and services reached a new milestone in 2006 — a record $763.6 billion — but this deficit is expected to decrease in 2007 for the first time in six years. In the region, the growth rate of the US trade deficit with the Arab market slowed to 18 per cent in 2006, down from 21 per cent in 2005 and 45 per cent in 2004. The US deficit with the Arab World totalled $39 billion as energy imports outpaced US manufactured exports to the region.

In addition to the comparative weakness of the US dollar, there are other trends that signal impressive increases in US exports in 2007, the report said.

"Last year, high oil prices translated into greater import purchasing power for Arab energy producing nations and a related “trickle down effect” for non-energy producers in the region. This trend is expected to continue in 2007," the report said. In other words, “megaprojects” initiated by Arab governments in recent years are expected to continue full speed ahead in 2007, and US exporters will supply products for many of these projects.

"In the same vein, cyclical demand for big ticket items is on the upswing, including civilian aircraft, military systems, and border security systems. A review of defence-related equipment and service contract filings with the US Defence Security Cooperation Agency in 2006 indicates a robust demand for US defence contractors over the next few years. The total value of contracts, if all options are exercised, exceeds $16 billion in hardware and services," the report said.

According to the chamber report, the Arab region’s consumer market is also helping to drive up US export sales. "Arab consumers have more disposable income than ever, and American products continue to carry significant cachet. On the whole, according to a serial survey conducted by MasterCard, consumer confidence in the region is on the rise. Saudi Arabia ranks highest at 97.3 out of 100, Kuwait ranked second at 94.5, and the UAE rose to 80.0. Consumer confidence scores were down slightly in Lebanon and Egypt."