UAE minister predicts 2.8% GDP trade pact boost by 2030

Creative Commons/Jakob Polacsek

• More FTAs to be added to those with India, Israel, Indonesia
• ‘Keep politics away’ and focus on business, Al Zeyoudi says
• UAE ranked 10th in Brand Finance’s global ‘soft power’ index this week

The UAE’s first bilateral free trade agreements, signed in the past two years, will boost its GDP by 2.8 percent by the end of the decade, according to the country’s trade minister, Dr Thani Al Zeyoudi.

The growth will result from access to new markets and populations in Indonesia, Israel and India, as the UAE avoids post-pandemic protectionist policies adopted by other nations, he added.

Al Zeyoudi told an event in London on Thursday that recent trade pacts with India, Israel and Indonesia would open up a market of more than two billion people for the UAE to tap – “almost one-quarter of the entire world population”.

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Financial Trade Agreements (FTAs) – treaties designed to reduce or eliminate barriers to trade and investment between two or more nations – will play a crucial role in helping the UAE to reach its “ultimate” goal of accessing 90 percent of global trade flows, Al Zeyoudi added. 

The UAE’s FTAs with India, Israel and Indonesia came into effect last year, with the UAE-Israel pact deemed groundbreaking as it marked the biggest diplomatic breakthrough in relations between Israel and its Gulf neighbours in decades. 

“We’re signing another [FTA] in the upcoming few days, and concluding two more in March. We’re moving aggressively with one objective: the economy is changing rapidly. If we don’t conclude FTAs quickly, they are going to be outdated, they are going to be useless,” Al Zeyoudi told a conference organised by brand valuation consultancy Brand Finance. 

“The impact [of the first three FTAs] is going to be huge in our economy – these agreements are going to inject 2.8 percent growth into our GDP by 2030 and there will be huge opportunities for our exports to those markets.

In January, the UAE reported a record AED2 trillion ($599 billion) of non-oil foreign trade for 2022, up 17 percent on 2021 and 37.5 percent on pre-pandemic figures from 2019, according to the UAE Ministry of Economy. 

Total exports were up 6 percent at AED366 billion, and imports grew by 22 percent to AED614.6 billion. Re-exports surpassed AED600 billion for the first time, up 14 percent from 2021, the figures showed.

Maintaining the UAE’s politically neutral stance – “keeping the politics away” – will help the country further grow its international trade ties, Al Zeyoudi added. 

“When we signed the historical accord with Israel, we opened a new bridge with the world. But if there’s a conflict, we’re going to sit around the table with the same people to resolve that. And we’ll keep the politics away and deal with countries directly.” 

He added: “We know we will not make everyone our friends, but we’ll reduce our enemies as much as we can, because we want to continue with our agenda of being a neutral nation.” 

The UAE is not pursuing the strategy of protectionism that so many countries are in the aftermath of Covid-19, the minister said: “We are sending a strong message that the UAE is open to everyone to come here, bring their families, their investments, stay for the long term, and feel at home here.”

The UAE’s neutral stance has been called into question recently, the Financial Times reported this week, with Western allies pushing the UAE to halt exports of certain goods to Russia. They claim electronics in particular can be repurposed and re-exported to help Russia’s war effort.

An analysis of Russian customs data by the Free Russia Foundation showed that exports of electronic parts from the UAE to Russia jumped more than sevenfold last year to $283 million, the FT said.  

The UAE jumped five places from last year to 10th position in Brand Finance’s latest annual ‘soft power’ index – which uses a range of metrics to assess a nation’s ability to “influence the preferences and behaviours of various actors in the international arena (states, corporations, communities, the public) without coercion”. 

It was “the star of the show” in this year’s index, noted Brand Finance chairman and chief executive David Haigh, joining the top 10 category for the first time alongside the US, UK, Germany and others. 

“The UAE was one of the first economies to roll out mass vaccination and reopen during the Covid-19 pandemic. The successful showcase of the Emirates as a global trade hub thanks to Expo 2020 Dubai has provided a significant boost [and] the UAE is one of the largest donors of foreign aid,” the report said. 

Improving perceptions of governance, the successful Emirates Mars Mission, and the UAE’s forthcoming hosting of the Cop28 climate conference will also “put the nation firmly in the spotlight in 2023.”

Other Gulf nations including Saudi Arabia and Qatar also saw their rankings rise in this year’s index.