Exporting to United Arab Emirates - Market OverviewUAE - Market Overview
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The United Arab Emirates (U.A.E.) is a significant U.S. export market and an important regional hub for American companies doing business throughout the Middle East, Africa and South Asia. The U.A.E. has a population of approximately 9.5 million, out of which about 85 percent is expatriates. In 2015, the U.A.E. registered a real GDP growth rate of 3.9 percent, down from 4.6 percent in 2014. Due to its vast oil wealth and relatively small population to which it must provide services, the U.A.E. is well positioned to ride out the current low-oil-price economy. To diversify away from oil, the government is transitioning from an investment economy to a knowledge economy. To this end, it is focused on developing new industrial and commercial sectors, including aerospace, healthcare, education, and defense and tourism.
The U.A.E. is a leading commercial center serving the Middle East, Africa, and South Asia, with a significant portion of its import volume ultimately being re-exported. Dubai in particular plays a central role as a regional trade, logistics and tourism hub. Its economy has also been buoyed by ongoing construction and infrastructure projects in the lead-up to the Dubai World Expo 2020. While the construction sector has come under substantial pressure due to the prolonged slump in oil prices, the sector remains resilient, and Dubai's planned real estate and infrastructure projects are progressing. Most notably, the expansion of the Al-Maktoum International Airport by Dubai Airport Authority, valued at $33 billion, is Dubai’s single biggest project.
Abu Dhabi has been relatively more exposed to the commodities downturn given its reliance on the oil sector. As a result, the government has enacted austerity campaigns to rein in its spending. The U.S. Mission has observed fiscal restraints and revenue-generating measures across the board, e.g., energy price reforms, subsidy reforms, wage freezes, prioritization of capital spending, and expansion of non-oil tax revenues. Some projects that have been delayed and could be awarded in the future include the second phase of the national railway network by Etihad Rail and the Sheikh Khalifa Medical Hospital.
Oil and gas production remains critical to the U.A.E. economy, with its hydrocarbon export revenues rising by nearly 65 percent between 2010 and 2015 from $75 billion to $123 billion. The state-owned Abu Dhabi National Oil Company (ADNOC) is in the process of expanding the output of crude oil from 2.9 million to 3.5 million barrels per day by 2020. It is also developing the country’s downstream industries, including petrochemicals and plastics. Despite lower oil prices, many market observers believe that ADNOC is on track to reach the 3.5 million barrels-per-day target by 2020, especially as Abu Dhabi is planning to spend $40 - $60 billion over the next five years to reach that target. Many projects are also planned and currently being implemented to enhance oil recovery from the reserves. ADNOC has been under pressure to cut costs to offset the fall in global oil and gas prices, with the company cutting 2,000 expatriate and local employees in 2016 and plans to cut an additional 3,000 by the end of the year, according to MEED reports.
In terms of U.S. trade, the U.A.E. is the largest export market for American merchandise exports in the Middle East. In 2015, U.S. exports to the U.A.E. totaled $23 billion, a 3.6 percent increase from 2014. U.A.E. exports to the United States decreased by 10.7 percent in 2015 to $2.5 billion. Overall U.S.-U.A.E. bilateral trade was $25.4 billion in 2015.
Leading sectors for American exporters in 2015 included aircraft, spacecraft, and associated parts; electric machinery, sound equipment, and television equipment; and nuclear reactors, boilers, and associated machinery. Demand for imported goods continues to be fueled by a number of factors including a rapidly expanding U.A.E. civil aviation sector, the country’s newly-formed space program-which aims to send a probe to Mars by 2020, implementation of major infrastructure and transportation projects, and ongoing oil and gas industry modernization and expansion.
Foreign direct investment (FDI) is a key pillar in the U.S.-UAE commercial relationship. Between 2012 and 2014, U.S. foreign direct investment in the U.A.E. jumped by over 76 percent to $15 billion. During the same period, U.A.E. foreign direct investment in the U.S. increased nearly 34 percent to $27.6 billion. The U.A.E. is now the 8th fastest-growing source of FDI in the United States, and the largest source from the Middle East.
United Arab Emirates Trade Development and Promotion