The total value of UAE´s foreign trade in the first half of 2012 touched Dh499 billion compared to Dh451.6 billion for the same period in 2011, recording an increase by Dh47.4 billion, up by 10.5 per cent, the National Bureau of Statistics (NBS) showed on Sunday.

The NBS said that the imports have also increased in H1 of 2012 to Dh321.4 billion compared to Dh286.3 billion for the same period of 2011, up by 12.3 per cent.

NBS figures showed that the national exports amounted to Dh77 billion in the first half of 2012 compared to Dh55.1 billion for the same period of 2011, up by 39.7 per cent and the re-exported commodities have increased to Dh100.5 billion during H1 of 2012 compared to Dh110.2 billion for the same period 2011, down by 8.8 per cent.

“About 30.2 per cent of the imported materials are heavy equipment and appliances at a cost of Dh97.1 billion,” NBS said, adding that re-exports sector witnessed tangible improvements in the last three years.

“Re-exports recorded Dh65 billion in 2009. In 2010, it increased to Dh95 billion; in 2011 it went up further to Dh110.2 billion and down to 100.5 billion in 2012,” NBS figures show.

The total non-oil foreign trade rose to Dh77 billion in the first half of 2012 compared to Dh55.1 billion in 2011, registering a 39.7 per cent increase, NBS said.

“Non-oil industries have started to increase steadily since 2009 when it was only Dh30 billion and in 2010 it rose to Dh40 billion. However, the figure increased further in 2011 to Dh50 and it went up further to Dh77 billion in 2012,” according to NBS.

Major trading partners

Non-Arab countries in Asia were the main trade partners of the UAE in the first half of 2012.

“Non-Arab Asian countries ranked first amongst UAE trade partners with traded commodities amounting to Dh230.4 billion, 46.2 per cent of the traded volume of commodities with the rest of the world,” NBS revealed.

NBS said: “The EU came second with a traded amount of Dh107.2 billion in H1, 2012, constituting 21.5 per cent of the UAE´s trade exchange with other blocs. The American countries came third with traded commodities worth Dh46.6 billion, recording 9.3 per cent, and the GCC came forth with Dh46 billion at a ratio of 9.2 per cent of the UAE foreign trade exchange with other countries.”

Dr Mohammad Amerah, chief economist at the Sharjah Chamber of Commerce and Industry, told Gulf News: “Such figures reflect that the county is following strong economic and strategic plans and is diversifying its economic activities compared to other countries which face recession and serious economic difficulties and hardships.”

“The growth of the UAE´s national industries and commercial services as well as stability have contributed to the confidence and trust of the investors to have businesses in the country and various trade exchanges with the UAE,” said Amerah.

Businesses in Dubai look forward to closing the year 2012 on a high note, according to the latest quarterly business survey conducted by the Department of Economic Development (DED) during July-September 2012.

The composite Business Confidence Index in Dubai rose to more than 122 points during the third quarter of the year, an increase of over 15 per cent on the previous quarter and 6.5 per cent on the same quarter of 2011. High levels of activity expected during the fall was a key factor keeping businesses buoyant on sales and profits.

Nearly 68 per cent of the businesses see stronger results during the final quarter of 2012 while 22 per cent expect stable outcomes. Expectations are the highest among manufacturing firms.

A high level of optimism is reported by services and trading firms too due to the coming festive season and growing inbound tourist traffic. Overall business sentiment during the third quarter also reveals that 45 per cent of companies saw no notable business challenge, reflecting an improvement in the perception of the business environment in Dubai.

“It is now clearly established that business in Dubai is in full swing and growth is here to stay. The overall business sentiment and expectations for the rest of the year shows that the sectors key to Dubai´s economy are set to perform remarkably well and fuel growth,” commented Sami Al Qamzi, Director-General, Department of Economic Development.

“The measures being implemented by Dubai to shore up investor confidence and facilitate economic activity have had a profound impact as is evident from the inputs businesses provided in the latest quarterly survey,” Al Qamzi added.

Dubai´s persistent focus on small and medium enterprises (SMEs) and on building export capabilities among local businesses also appear to produce good returns. SMEs expressed higher optimism on sales, revenues, volumes and profits than large companies while exporters have higher expectations on almost all counts compared to domestically-focused firms.

Mirroring the rising expectation on sales, 63 per cent of the companies are planning to increase their new purchase orders in the next quarter. The manufacturing sector expects higher sales volume than other sectors, with 78 per cent expecting rising sales in the next quarter, compared with 67 per cent in the previous quarter.

Within the services sector, construction-related firms are the most optimistic as they expect new projects from local as well as regional markets. Among the service sub-sectors, advertising firms anticipate more business in the fourth quarter, compared to the second and third, as demand for advertisements and promotions go up during the festive season.

Businesses also painted a stable picture of the employment situation with 94 per cent determined to maintain their current workforce and a further six per cent planning to hire additional workers in Q4 2012. None of the businesses expect to decrease their workforce.

The overall assessment for Q4 2012 is that business will get better, with 95 per cent expecting either improvement or stability in comparison against 85 per cent only in Q3 2012. The investment outlook for Q4 is also stable compared to the outlook in Q3, with large companies expressing more interest in expanding their productive capacity than SMEs.

Challenges cited by businesses in the third quarter were almost similar for SMEs as for larger enterprises. While competition remains the top challenge, insufficient demand, cost of raw materials and government fees follow in that order.

DED conducts the quarterly surveys to measure the perceptions of the business community and capture the business outlook for the future. The survey serves as an effective tool for measuring the pulse of the business community and allowing the government and the private sector to track and analyses major trends and issues that have a bearing on business in Dubai.

A total of 520 companies in Dubai were covered in the survey. The companies were asked to indicate if they anticipated an ‘increase,’ ‘decrease,’ or ‘no change’ in key indicators such as sales revenues, selling prices, volumes sold, profits and number of employees.

Conducted in collaboration with the consultancy firm Dun & Bradstreet (D&B), the quarterly survey uses a rigorous sampling approach that ensures adequate representation of small, medium, and large enterprises across the manufacturing, trading, and services sectors, while giving due attention to the perceptions of Dubai´s exporters.

The UAE banking sector will witness the peaking of the non-performing loans (NPLs) this year and will see a modest fall in NPLs next year, Moody´s Investor Service said yesterday.

“We expect UAE-wide NPLs to peak in 2012 at the upper end of the 10-12 percent range and then decline marginally in 2013 to the lower end of the 10-12 per cent range. While the peak will be largely driven by the culmination of impairments by government related issuers and legacy real estate exposures, we expect the slight easing of asset quality pressure in 2013,” said Khalid Ferdous Howladar, Vice President-Senior Credit Officer, Moody

Moody´s said its outlook for the UAE banking system remains negative. Analysts attribute the outlook for largely to legacy asset quality issues related to restructurings of corporate and government related entities.

The rating agency expects Abu-Dhabi based banks to perform better, with about 6 percent to 8 percent NPLs in 2012, compared to Dubai-based banks, which are expected to maintain NPL ratios in the 15 percent to 17 per cent range peaking in 2012.

Moody´s expects the overall loan growth in the country to be constrained by slower pace of economic recovery and overhang of NPLs from the past. Although Moody´s sees the domestic operating environment to recover consistently, the rating agency said it expects weak confidence to generate only modest overall credit growth of 4 per cent to 7 per for 2012 and 2013. In relative terms, Moody´s analysts expect credit growth of Abu Dhabi banks faster, supported by higher public sector spending and relative strength of their balance sheets.

Recently Standard & poor´s said it expects the UAE banking system to register low single-digit credit growth in 2012. Since 2008, Abu Dhabi banks have continued to underwrite new loans, although at a moderate pace.
Credit risk
“Credit risk remains high in the UAE, in our view, notably owing to the debt overhang of some Dubai-based government-related entities (GREs)which will further restrict lending growth, in our view,” said Timucin Engin, an analyst with S&P.

With the expected modest loan growth, profitability is expected modest loan growth and high provisioning.

In a recent statement, the UAE Central Bank said the banking system in the country is stable and banks adequately capitalized and are insulated from the current financial market turmoil. Rating agencies agree the UAE banks capitalization, funding and liquidity profiles to remain strong.