By Andy Sambidge
Latest HSBC report says region will see much faster growth than average global
Trade in the Middle East and North Africa (MENA) region is expected to grow by 131 percent to 2026, much faster than world trade growth over the same period, according to HSBC's latest Trade Connections report.
While hydrocarbons remain a key trading focus for the region, the increase in importance of iron and steel underline the pace of industrial growth in MENA, the report said.
Tim Reid, regional head of Commercial Banking, HSBC Bank Middle East said: "There is no denying the challenges the region has faced and continue to face this year. Nevertheless today's data very much supports our belief in the long term economic potential of the region.
"The Middle East as a whole remains an ideal hub for North to South, East to West and intra-regional trade flows. Businesses should continue to feel confident about the future."
The quarterly forecast showed that not only will the MENA region grow its trade at a substantially faster rate than the rest of the world, but that international business are becoming less reliant on Europe and the US for trade links.
The data predicted that the region's current largest trading partners for 2012 will be the USA, China and India, reflecting the dominance of oil, gas and hydrocarbons to the region.
Reid added: "While two thirds of the world's discovered crude oil reserves are in the MENA region, we shouldn't just see the region as a pure hydrocarbon story when we look at long term trade.
"Diversification is not just apparent, but predicted to grow in importance."
Assuming no further political crisis, Egypt is predicted to be the region's fastest growing exporter and importer in the medium to long term.
Trade growth in Egypt will expand by 167.40 percent to 2026, HSBC said.
The report added that Saudi Arabia's trade forecast is set to grow by 107.12 percent to 2026.
Like many of the MENA countries, Saudi Arabia fared comparatively well throughout 2011 despite the global economic downturn and the Eurozone debt crisis. Saudi Arabia will see its export trade increase by 5.52 percent over the next five years while imports will increase by 6.99 percent, fuelled by expansion of its own infrastructures.
Trade forecast data showed that UAE companies expect to increase trade activity by 5.52 percent annually over the next 15 years, with overall trade growth expected to now grow by 124.03 percent to 2026.
Growth is expected to be fuelled by the emergence of trade in electrical apparatus, jewellery and aircraft as well as the oil and oil derived products.
Qatar's trade is forecasted to grow by 150.74 percent to 2026, the HSBC report added.
It said the sectors which will grow most quickly over the next five years in the MENA region fall into three categories - commodities such as iron ore, lead, rice, and wheat; infrastructure such as iron and steel products; and electronic products such as integrated circuitry.For all the latest industry news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.