A top Dubai official has said the emirate’s economy has felt only a modest impact on trade from international sanctions against Iran so far.
“It’s still moderate in terms of trade but we are closely watching the number how it is affecting the near term and the long term as well,” said Hani al-Hamli, secretary general of Dubai Economic Council.
“How much? I do not recall the numbers,” the Dubai official told reporters on the sidelines of a conference on financial restructuring and bankruptcy.
Dubai’s foreign trade in 2011 was more than AED1.1trn ($299bn), an increase of 22% compared to the AED902bn ($245.58bn) achieved in 2010.
Last month, Dubai Customs’ chief said he believed sanctions targeting Iran due to its disputed nuclear programme and looming economic slowdown in emerging economies such as China would not have a strong impact on trade.
Dubai’s direct re-exports to Iran increased 29% to AED31 billion ($8.4 billion) last year, the fastest growth rate over the past five years, although figures showed a marked slowdown in the last three months of 2011.
The emirate’s total direct trade with the Gulf neighbour stood at AED36 billion in 2011.
Neighbouring Oman is also feeling the pinch of US-led sanctions aimed at taking down Iran’s lucrative oil exports.
An IMF poll in March suggested that sanctions against Tehran may also bite Dubai’s economy, whose trade links with the Islamic Republic are significant than other states in the GCC.
“Iranian trade can be anything up to 7% of Dubai’s GDP, so if you see a 50% drop of trade with Iran that could potentially be a 3 to 4 percent fall in Dubai’s GDP,” said Farouk Soussa, Citi’s Middle East chief economist.
However, the IMF thinks sanctions against Iran will trim 0.2 to 0.7% of UAE gross domestic product (GDP) annually.
Dubai accounts for nearly a third of the UAE’s GDP. The emirate’s economic department said in February it is aiming for an economic growth of 4.5% this year, up from an estimated expansion of more than 3% in 2011.