By Staff writer
Latest HSBC Trade Forecast also says India will become the UAE's largest import and export partner
The UAE’s services sector - particularly travel and tourism – will drive the rate of the country’s trade growth in the period to 2030, according to the latest HSBC Trade Forecast.
While the hydrocarbon sector will continue to contribute to the majority of trade volumes, its growth rate is anticipated to be slower in the forecast period, the research said.
In terms of the UAE’s most important trade corridors, according to HSBC’s research, India is anticipated to become the largest import and export trade partner, both in terms of goods and services, by 2030.
It said macroeconomic volatility and a persistent low oil price environment are some of primary factors driving the complex global outlook for trade in 2016 and beyond.
"As these headwinds are anticipated to predominantly affect goods and merchandise trade in the UAE and globally, businesses focused on the services sector are expected to fare better in comparison," according to HSBC’s latest Commercial Banking research.
The HSBC Trade Forecast is a biannual research series that forecasts a full bilateral set of trade flows for total imports and exports of goods between 180 pairs of countries.
It said that the UAE has been one of the most successful countries in the region for its diversification efforts, and this strategy has been supported by investment in services such as tourism and financial services.
HSBC said its research indicates that the contribution of services to total exports in the country rose from 16 percent in 2000 to 23 percent in 2015.
It added that businesses focusing on tourism and travel in particular have benefited, with the sector accounting for 58 percent of services exports last year, up from 43 percent in 2000.
Additionally, HSBC forecasts this share to increase to 62 percent by 2030. Projects such as Expo 2020 and Abu Dhabi’s Surface Transport Master Plan are the type of initiatives that are anticipated to drive growth in services.
HSBC said expectations for the growth in tourism and travel appears to be reiterated by estimates from the UAE Ministry of the Economy, which indicate that the sector will expand 5.4 percent annually over the next decade and be worth AED236.8 billion by 2026, up from AED134 billion last year.
Ahmed Abdelaal, regional head of Corporate Clients Coverage MENA and head of Commercial Banking, HSBC UAE, said: “The UAE’s investment in services, and tourism in particular, is reflective of the government’s well thought out, forward-looking approach As a result of the focus on this area and factors such as technological advances, rising consumer spending and falling travel costs fuelling the services sector, businesses operating in this space will benefit from more opportunities than those companies focused primarily on merchandise trade.”
HSBC said India is anticipated to become the largest import and export trade partner, both in terms of goods and services, by 2030.
In terms of merchandise exports, India is expected to overtake Japan given the South Asian nation’s growing demand for energy from strong economic and population growth while Vietnam is expected to see the fastest growth for UAE exports, rising 10 percent a year from 2021 to 2030.
With regards to imports, India will displace China as the top importer by 2030 as its exports to the UAE grow 14 percent a year in 2016-20 and then 11 percent a year in 2021-30.
Abdelaal added: “India has historically enjoyed strong ties with the UAE and businesses are well aware of the opportunities for bilateral trade. Another interesting corridor that more companies in the UAE are exploring is Vietnam.”