Despite the slow pace of economic recovery by many of its key partners, Dubai's non-oil foreign trade has maintained solid momentum, with direct exports on the rise.
While Dubai posted a sharp increase in the volume of traded goods in the first half of 2016, with shipments rising by 19.5 per cent year-on-year to 49 million tonnes, the value of its external trade eased marginally compared to the same period last year, according to latest data issued by Dubai Customs in October.
In the first six months of the year, Dubai's non-oil trade was valued at Dh647 billion, with imports accounting for Dh401 billion of the total. Exports of Dh74 billion and re-exports of Dh172 billion made up the balance.
Despite being slightly down on the total for the same term last year at Dh652 billion, results from the first six months put Dubai on track to at least match trade of Dh1.28 trillion in 2015.
Dubai's import bill for the first half of this year was steady, dipping by 0.25 per cent from the six-month total of Dh402 billion in 2015. Imports accounted for approximately 62 per cent of Dubai's trade for the term, with re-exports making up the bulk of the balance, despite this component recording a fall. In the same period, re-exports dropped by seven per cent to Dh172 billion, though part of this decline was balanced by the Dh9 billion increase in direct exports.
Of Dubai's imports, the majority came through open trade channels, with Dh267 billion arriving via direct foreign trade, while a further Dh134 billion entered either through free trade zones or the Customs warehouse trade.
Direct foreign trade also accounted for just under half of Dubai's re-exports, with a value of Dh85.7 billion, compared to Dh85.9 billion shipped via free trade zones, with total exports arriving predominately via direct foreign trade, according to Dubai Customs data.
While Dubai's 2016 non-oil trade figures are on the way to match those of last year, 2015 represented something of a disappointment for Dubai's importers and exporters, as it was the first time since 2008 that foreign trade had fallen back in value terms, with shipments easing by 3.6 per cent over the year.
With uncertainty over the direction of the economy of Dubai's largest trading partner China, as well as flat trading figures with the emirate's next three biggest trading partners - India, the US and Saudi Arabia - Dubai has done well to stem any further falls and to gain ground in some key segments.
The driving force behind Dubai's trade continues to be pearls, precious stones and metals, the feedstock of the emirate's jewellery sector.
The segment dominated Dubai's imports, exports and re-exports in the first half of the year, with values of Dh86.7 billion, Dh34.5 billion and Dh33.7 billion, respectively, and representing 32.5 per cent of imports, 51.7 per cent of exports and 39.3 per cent of re-exports.
This could be a reflection of a move into gold and similar assets during extended instability in the region, as well as in the global economy, though Dubai's increased appeal as a tourism and trade destination is also likely a factor. In particular, Dubai's high-quality gold and no sales tax are a draw for tourists.
Other leading contributors to Dubai's import trade were the machinery and electronic equipment, and vehicles, aircraft and transport equipment segments. Base metals and prepared foodstuffs contributed to the country's exports, though the value of the categories combined fell short of the pearls, precious metals and gemstones trade.
Bringing Iran into the fold
One factor that could further affect Dubai's trade figures is the lifting of trade sanctions against Iran.
The opening of the country's doors to foreign investment has seen a marked increase in retail development and tourism facilities. With Iran also investing in improved transport and logistics infrastructure, more of the country's foreign trade will likely pass through its own ports, rather than via third countries such as the UAE.
This is expected to have an impact on Dubai's re-export trade; with Iran less reliant on the route, imports from the UAE declined 35 per cent to $7.8 billion during the last Iranian calendar year ending March 19, according to international press reports.
Offsetting any downturn stemming from Iran's increased appeal as a tourism and investment destination will likely be higher demand for direct exports from Dubai and the rest of the UAE, as well as a stronger flow of inbound Iranian tourists.