UAE a major hub of Japanese exports to the region

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Dubai, UAE: A recent study released by the Dubai Chamber of Commerce & IndustryDubai Chamber of Commerce & Industry, indicated that Japan's exports to the UAE started to recover by the end of the year 2009 as the UAE is one of the largest markets of Japanese products in the Middle East. The study further revealed that from a total export value of ¥ 230 bn or a share of 10% to Japan's total exports to the region in 1979, Japanese exports to UAE had grown considerably in the recent years to a total value of ¥ 1,124 bn in 2008 (Fig. 1), or a share of 32% to the total Middle East exports. Between 2001 (when Japan's total exports to UAE was only ¥ 312 bn) and 2008, Japan's exports to UAE grew at an average annual rate of 20%.

Export to UAE starts to recover in June

Japan's major exports to UAE are capital and consumer goods for domestic consumption and for re-export, mainly to countries in the region and in Africa. The global economic crisis that started to manifest its impact on the UAE during the last quarter of 2008 had weakened market demand in the region, in response to plummeting oil prices and reduction in disposable income. Thus, monthly exports data released by Japan showed significant reduction in the country's exports to UAE starting the 4th quarter of 2008 (Fig. 2).

Dubai ChamberDubai Chamber

Dubai ChamberDubai Chamber

For the first 10 months of 2009, total export to the UAE was valued at ¥ 493 bn, marking a 48% decline from the ¥ 944 bn recorded for comparable period in 2008. However, the figure also shows that this overall decline was primarily due to the significant slump in the beginning of the year. In fact, month-on-month growth had begun to turn around beginning in June 2009, with an increase of 15%. Although the summer exerted a downward push for a decline of 12%, a correction was made in the following month, with September exports to the UAE recovering and posting a 21% growth to a total value of ¥ 53 bn; followed by a 4% growth to ¥ 55 bn in October.

Vehicles and their parts and accessories are Japan's main exports to the UAE. Comparing total exports for the first 10 months of each year, Fig. 3 shows that exports of this product group had dropped by 68% in 2009 to a value of ¥ 136 bn from ¥ 431 bn a year earlier; leading to a drop in share to 28% from 46%.

Other major exports are machinery/ mechanical appliances, electrical/electronic equipment, rubber products and iron/steel products. Total exports of these products account for more than 80% of total exports to the UAE. From 2006 to 2008, exports of vehicles and parts accounted for more than 40% of Japan's exports to UAE.

Although exports of the other product groups had also declined, the reductions were not comparable in magnitude. Exports of machinery/mechanical appliances slowed down by 38% to total value of ¥ 103 bn; electrical/electronic equipment, by 21% to total value of ¥ 91 bn; rubber products, by 13% to total value of ¥ 40 bn; and iron/steel products, by 40% to total value of ¥ 26 bn. Value of all other exports for the first 10 months of 2009, valued at ¥ 97 bn, represented an annual decline of 31%.

Improvements noted in the recent months

Monthly exports of the major products from January 2006 to October 2009 showed that decline in vehicle exports to UAE started in January 2009 when export value was recorded at ¥ 34 bn, following a peak of ¥ 53 bn in December 2008, or a 35% reduction. Thereafter, the decline continued to an export value of only ¥ 6 bn in May 2009. Improvements were noted in the following months to ¥ 19 bn in September and to ¥ 21 bn in October.

As shown in Fig. 4, Japan's exports of the product group to UAE accounted for 40-50% of the total exports to the country. However, as exports of the products dropped, the share plunged with it. The recent upturn in export value also effected a climb in export share.

Fig. 4. Value and share (to total) of Japan's exports of transport equipment and parts to UAE , January 2006 - October 2009 .

Taking note that a large share of UAE's imports are destined to markets in the region, the above findings are consistent with the pattern noted for exports of Dubai ChamberDubai Chamber members, which shows signs of slow but continued improvements beginning in June 2009.

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Established in 1965, the Dubai Chamber of Commerce & IndustryDubai Chamber of Commerce & Industry is a non-profit public entity, whose mission is to represent, support and protect the interests of the business community in Dubai by creating a favorable business environment, supporting the development of business, and by promoting Dubai as an international business hub.

© Press Release 2010