Foreign trade to rise 20%: Lubna

Sheikha Lubna bint Khaled Al Qasimi, UAE Minister of Foreign Trade, has said the UAE’s attainment of an advanced global ranking in HCSB bank’s Trade Confidence Index (TCI) over the next six month period underlines the country’s important commercial standing and the government’s dynamic efforts to boost the competitiveness of its commercial sector.

She added that India’s positioning as global leader in terms of trade confidence is a positive outlook for trade in the UAE in the coming months, as it is the UAE’s number one trade partner. She also noted that she expects UAE foreign trade to increase by 20 per cent this year.

Exporters and importers around the world remain optimistic about trade prospects in the next six months despite increasing concerns about rising costs, reduced profitability and volatile demand. In the Middle East and North Africa (Mena), the regional average was the highest in the world at 118, whilst the global HSBC TCI held steady at 114 in the first half of 2011 compared to 116 in the second half of 2010.

“In the UAE, government efforts to guard the economy and commerce in light of the downturn through key policies and additional business and investments incentives have paid off in terms of Arab and international trade. This reflects a common theme throughout the region and will hopefully see MENA states post a strong year-long trade performance,” said Sheikha Lubna.

This fifth wave of the HSBC TCI shows that MENA traders are most concerned about buyer and supplier risk, with 37 per cent (up 11 points on the previous wave) expecting buyer default risk to increase, and 41 per cent (up 20 points) expecting an increased number of suppliers to be unable to meet their arrangements. The top strategy for managing buyer default risk was greater use of secured trade finance options via banks.

Registering as the 6th highest score in this round of the HSBC TCI, the UAE remains one of the most positive nations for trade confidence, despite a slight dip from the last round. UAE traders still report the highest levels of intra-regional trade, with 64 per cent of respondents reporting trade with the Middle East as their primary region for growth.

Outlook on trade volumes is strong as 25 per cent of respondents in UAE expect their trade business to increase significantly in the next six months, up 6 points on the last round. Overall, 85 per cent expect the trade volumes to increase or maintain at same levels, despite the volatility experienced in the region.

“Trade health remains solid around the world, displaying resilience to rising prices, interest rate increases and inflationary issues,” noted Kersi Patel, Regional Head of Trade and Supply Chain, HSBC MENA. “We believe that these results show that trade flourishes in an environment where trade finance is readily available from the banks, combined with a proactive and fair regulatory environment. The MENA results show that traders operating in the Middle East continue to view government regulation as a positive influence on regional trade flows, and their corresponding business growth.”

Encouragingly, MENA traders are not concerned about a reduction in overall volumes of trade, nor do they see intra-regional trade threatened by recent political events. The number who expects trade volumes to stay the same or increase is up 5 points on the previous round, at 80 per cent.

Tim Reid, Head of Commercial Banking, HSBC MENA, noted: “In the region, trade has traditionally played a critical role in driving economic growth, buoyed by its growing importance as a global hub for East-East trade. Energy exports out of MENA contribute a significant amount to GDP in many countries around the region, and with the oil price remaining high, purchasing power and infrastructure spend is expected to remain strong in the medium term, supporting this trend in the medium term.”

India topped the HSBC Index with 140 points compared with a global average of 114 points, followed by regional heavyweight Saudi Arabia with 132 points (up 14 points), where traders reported the highest increase in trade confidence in the world, moved the country from 7th place to 2nd place in this recent survey.

The report also shows that Saudi traders see huge positive impact from global exchange rates (up 20 points), the impact of government regulations (up 27 points), and trade volume (up 14 points).

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