Both Gulf countries to remain major oil producers, although will diversify economies
The UAE and Saudi Arabia will increasingly focus their oil exports on industrialising economies in Asia, in line with a transformation of international trade flows towards emerging markets, according to a report by HSBC and Oxford Economics.
Both of the Gulf countries will remain major oil producers during the next two decades, although Saudi Arabia – the world’s largest oil producer - will gradually diversify its export trade into other sectors where it is also competitive, such as plastics and chemicals, the report said.
While maintaining petroleum exports, the UAE is expected to have the tenth largest growth in merchandise exports in the world between 2021-30.
Emerging Asian economies, where demand for raw materials is expected to rapidly expand, also are expected to constitute the fastest source of export growth for Egypt as it sees petroleum overtake chemicals as its major export.
Egypt is expected to maintain its key trading partners India, Saudi Arabia and the US, while China rises to become a major market by 2030 as other traditionally important countries, such as Turkey and France, decline in significance.
Globally, the large emerging economies will drive a rebound in world trade and contribute the majority of gross domestic product growth in the coming decades, in contrast to developed nations, whose exports are expected to grow at a more subdued pace, the report said.
Export growth will be strongest from India, Vietnam and China, which are all expected to post double-digit annual growth until at least 2020.
“Trade between emerging markets (so-called ‘south-south’ trade) will increase in importance as these economies grow wealthier, entailing a shift towards higher domestic demand,” the report said.
“Advanced economies currently conduct the majority of their trade with other developed economies, but they will see a growing share of their exports directed to the emerging markets."
“Faced with competition from lower-cost producers in the emerging markets, exports from the advanced economies will be increasingly focused in high-technology sectors, where they can still command a competitive advantage.”
China is expected to shift its expertise from textiles and wood manufactures to more sophisticated sectors such as industrial machinery and ICT equipment, which could soon account for half of the nation’s forecast growth.
HSBC said this will create opportunities for economies with ample supplies of low-cost labour, such as Vietnam and Bangladesh, where export growth is forecast to average 10-12 percent a year in the decade to 2030.