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A sharp decline in oil prices combined with lower crude supplies to depress exports by the UAE and five other Gulf countries to Japan by nearly 48.5 per cent in the first 11 months of 2009, according to official Japanese data.
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.
Japan's exports to the six members also plunged by around 37.6 per cent because of the recovery of the US dollar, lower demand in the region, a fall in global prices, and a steady growth in trade between the GCC and China.
From around $136.69 billion (Dh501.65bn) in the first 11 months of 2008, exports of goods by the 29-year-old Gulf alliance to the southeast Asian industrial giant plummetted to nearly $70.55bn in the first 11 months of 2009, showed the figures released by the Japan External Trade Organisation (Jetro).
The UAE recorded the largest decline in its exports to Japan as they tumbled by nearly 54.7 per cent. But the Emirates maintained its position as the largest Gulf market for Japanese products, despite a plunge in its imports this year.
Saudi Arabia's exports to Japan slumped by nearly 46.8 per cent, while those by Kuwait tumbled by around 45 per cent. There was also a sharp decline in the exports of the remaining GCC members –Qatar, Bahrain and Oman. The drop slashed the GCC's trade surplus with their main economic partner to around $54.89bn from about $111.59bn in the same period.
Analysts said the fall in the region's exports to Japan was caused by a steep drop in Gulf crude output and oil prices, which averaged nearly $60 a barrel in the first 11 months of 2009 compared with $95 in the same period of 2008.
The GCC's oil production slumped by more than 1.5 million barrels per day in line with a collective Opec agreement to trim supplies to prop up prices. The region's crude exports to Japan are also believed to have shrunk during 2009 because of slackening demand following the eruption of the global financial distress.
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.
Massive oil supplies have kept the GCC-Japan trade balance largely in favour of the Gulf group, with the surplus peaking at nearly $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 total oil imports.
Besides crude, the GCC's exports to Japan include aluminium, natural gas, LNG and petroleum products. Their imports from that country comprise mainly electronics, vehicles, machinery, and other industrial products.
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