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Outlook for global trade remains uncertain, says DP World boss

DP World Supplied
DP World's flagship port of Jebel Ali in Dubai continued to deliver 'robust' volumes
  • Geopolitical environment and currency fluctuations of concern
  • DP World trade expected to continue to outperform market
  • Global growth forecast to slow from 6% in 2021 to 3.2% in 2022

The chairman and CEO of DP World said on Tuesday that the outlook for global trade remains uncertain as the port operator posted a small increase in container volumes.

Growth in the third quarter of 2022 was primarily driven by a solid performance across the company’s Asia Pacific, Americas and Australia terminal. Its flagship port of Jebel Ali in Dubai continued to deliver “robust” volumes with growth of two percent year-on-year.

“The near-term outlook remains uncertain given the geopolitical environment, inflationary pressures and currency fluctuations but we remain positive on the medium to long term outlook for global trade,” said Sultan Ahmed Bin Sulayem. 

“Given the solid nine-month volume performance, we expect to deliver an improved set of full year results.”

According to the International Monetary Fund, global growth is forecast to slow from six percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023.

This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the coronavirus pandemic.

Dubai-based DP World handled 59.6 million TEU (20-foot equivalent units) across its global portfolio of container terminals in the first nine months of 2022, with gross container volumes increasing by 2.5 percent on a like-for-like basis. 

In the third quarter, DP World handled 20.1 million TEU, up 2.1 percent, a statement showed.

Bin Sulayem said: “As expected, growth rates have decelerated due to the more challenging market conditions, but global trade continues to remain resilient, and our portfolio is expected to continue to outperform the market.”

The DP World figures come as research conducted by Grant Thornton suggests mid-market businesses in the UAE with between 100 and 2,000 employees are optimistic about export growth despite the threats of rising inflation, a talent war, political upheaval and global economic contraction.

While ongoing conflicts have resulted in growing international sanctions and redrawn political alliances leading to reshaped trade routes, the vast majority of the 5,000 mid-market businesses across 28 countries expect exports to increase in the coming year, it said.

Clothing, Apparel, Person
DP World chairman and CEO Sultan Ahmed Bin Sulayem

Over 50 percent of organisations in Brazil, India, Indonesia, Nigeria, Turkey and the US are hopeful that exports will increase over the next year.

UAE respondents were slightly more cautious regarding international trade, with only 35 percent expecting export increases. A further 40 percent of UAE organisations surveyed expect their revenue from non-domestic markets.

“The threat of high inflation and anticipated recession in many countries are contributing to rising economic uncertainty,” said Hisham Farouk, CEO at Grant Thornton. 

“Businesses in the UAE and globally are rapidly reassessing their expansion plans, and we are seeing a number of globalisation trends reshaping supply chains and evolving new trade routes.”

The survey showed that the appetite for international expansion remains strong within the mid-market. It also suggested global trade routes and supply chains are reshaping along geographic and political lines. 

Farouk said the UAE benefits from its location, acting as a trade and travel hub and providing links between the west, including the US and Europe, and the east, including China, Japan, Australia and New Zealand, in addition to offering routes into Africa.

The survey noted that although inflation in the UAE and wider GCC remains lower than in countries in Europe and the Americas, local businesses are still seeing a reduction in margins and are fighting to be competitive. 

“Many organisations have been able to pass costs for both labour and materials onto customers by raising prices,” said Farouk.

“However, the risk of inflation cannot be mitigated through increased prices alone. While this strategy is effective when demand is strong, there is no guarantee demand won’t, at some point, weaken.”