GCC exports to Japan slump 50% in two months

A sharp fall in oil prices allied with lower crude supplies to depress the exports by the UAE and five other Gulf countries to Japan by more than 50 per cent in the first two months of 2009, official figures have shown.

The decline reversed several years of rapid growth in their exports to the largest importer of Gulf oil and sharply narrowed a trade surplus enjoyed by the six-nation Gulf Co-operation Council (GCC) with Japan for a long time.

From around $22.74 billion (Dh83.3bn) in January and February 2008, exports of goods by the 28-year-old Gulf alliance to the southeast Asian industrial giant plunged to nearly $10.82bn in the first two months of this year, showed the figures by the Japan External Trade Organisation (Jetro).

Japan's exports to the GCC also declined from around $3.9bn to $3.1bn in the same period and experts said the fall was mainly caused by lower global prices triggered by the financial crisis.

Jetro's statistics showed the UAE recorded the largest decline in its exports to Japan as they plummeted by nearly 57.4 per cent during that period.

Saudi Arabia's exports to Japan dived by 55 per cent while those by Kuwait slumped by nearly 52.4 per cent. The decline was around 47.6 per cent in Bahrain's exports, and 40.2 and 40.1 pert cent in those by Oman and Qatar.

The drop slashed the GCC's trade surplus with their main economic partner to around $7.7bn from $18.7bn in the same period.

Experts said the fall in the region's exports to Japan was a result of a steep decline in oil prices, which have collapsed by more than $100 over the past few months after soaring to an historic high of $147 in late July.

From an average $95 during January-February 2008, the price of Opec's basket of crude tumbled to only $41 in the same period of 2009.

GCC's oil supplies to Japan are also believed to have slumped during the first two months of 2009 as regional states are cutting output in line with Opec agreements to trim production by a total 4.2 million bpd to prevent a further slide in crude prides.

Strong crude prices combined with high output boosted the GCC's exports to Japan to a record high of $144.1bn in 2008 from $98.5bn in 2007, an increase of nearly 47 per cent, according to Jetro.

The UAE emerged as the second-largest Middle East exporter to Japan in 2008 and the first two months of 2009 given its high crude supplies to Tokyo, estimated at more than one million barrels per day.

The UAE is also a major LNG supplier to Japan, with exports of nearly five million tonnes a year.

Saudi Arabia has remained the top exporter to Japan but was the second-largest market for Japanese products after the UAE.

Large crude supplies have kept the Gulf-Japan trade balance largely in favour of the GCC, with the surplus peaking at $117bn in 2008.

Japan gets more than 80 per cent of its oil needs from the GCC, Iran, Iraq and other Middle Eastern crude producers. Saudi Arabia and the UAE alone supply it with more than two million bpd, nearly half its oil imports.

Besides crude, the GCC's exports to Japan include aluminium, natural gas, LNG and petroleum products.

Their imports from that country comprise electronics, vehicles, machinery, and other industrial products.

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