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Bilateral relations between the UAE and Spain Fact Sheet UAE as a gateway to the Gulf The countries of the Middle East and GCC have directly benefited from the recovery in world trade and higher oil prices and from the increasing shift in their pattern of trade towards Asia and Europe. In this context, the UAE has been a major beneficiary due to the massive investments it has made in ports, airports, transport systems and trade facilitating logistics. The World Bank’s 1 Logistics Performance Index (LPI) ranks the UAE 24th on a global basis, the highest rated country in the Gulf and MENA. The regional and international networks of Emirates Airlines and Etihad make the UAE the most connected country in the Middle East, South Asia and Africa for passengers and cargo. Dubai Ports World is one of the largest marine terminal operators in the world, with 50 terminals and 11 new developments across 31 countries, with an extensive coverage of the fast growing emerging economies. Compared to other countries of the Middle East, the GCC are characterised by high growth, liberal economic policies and open labour markets, with trade and investment policies that facilitate foreign direct investment. The GCC sit on over 50% of the world’s proven oil & gas reserves but are focusing on economic diversification in order to create jobs for their demographically young and fast growing populations. They are increasingly internationally competitive as a result of the implementation of WTO participation and liberal trade policies with a low external tariff (5%) as part of the GCC customs union. The GCC are moving to greater regional economic integration, with the gradual implementation of a GCC Common Market. Given its central location between Europe and Asia at the mouth of the Gulf, the UAE/Dubai has became an important destination for global and regional tourism, rising as a top location for shopping, leisure, international conferences and media events. The strong growth of the tourism sector (more than 15% p.a.) has had a multiplier effect on the economy in the UAE, not only because of its direct contribution to GDP, but also for its indirect effect on retail sales and transportation (including logistics), which together represent about 44% of GDP. UAE is in the list of the top 15 importers for transportation services 1 The WB’s Logistics Performance Index (LPI) aims to rank economies on the Ease of Shipping and Trade. It is based on a worldwide survey of operators (global freight forwarders and express carriers), providing feedback on the logistics “friendliness” of the countries in which they operate and those with which they trade. They combine in-depth knowledge of the countries in which they operate with informed qualitative assessments of other countries with which they trade, and experience of global logistics environment given its increasing role as a logistics hub, and is the 7th main international destination of Russian travelers. The Table below provides main macroeconomic indicators for the UAE confirming the recovery of economic from the effects of the global Great Recession. Macroeconomic indicators of the UAE show an overall positive trend since the crisis with an estimated real GDP growth in 2010 of 1.3% compared to last year. The current account has swung into a surplus of 7.8% of GDP compared to a deficit of last year (-3.1%), while public debt has decreased to 41.6% compared to 46% of GDP in 2009. UAE exports were estimated at 192.2 billion $ in 2009. This represents about half of the total exports of the GCC countries, while Imports of the UAE represent about 37.8% of total GCC imports. UAE Macro Indicators 2007 2008 Population (millions) 5.3 Real GDP growth (%)* 6.1 Nominal GDP (US$ bn)* Budget balance (%GDP) 2009 2010 5.6 5.4 5.5 5.1 -0.7 1.3 207.6 261.4 230.0 252.7 9.1 14.2 2.6 2.5 Public debt (%GDP) 41.2 39.4 46.0 41.6 Government consumption (%GDP) 10.1 9.3 19.3 20.1 Private consumption (%GDP) 46.2 45.5 47.4 47.2 Domestic demand (%GDP) 90.0 88.6 95.2 95.6 Trade balance (%GDP) 13.8 15.3 8.7 6.5 9.4 8.5 -3.1 7.8 77.2 31.7 36.1 39.1 Current Account (%GDP) International Reserves (US$ mn) * IMF data Source: Economic Intelligence Unit Trade Balance UAE is considered as the first destination of Spain exports in the Middle East region, and is ranked as the third in the MENA region. Spain exports to the UAE are estimated at about € 1 Billion. The trade balance between both countries has been traditionally favorable to Spain, having reached its record on 2008 with a positive variation of 19.4%. 1 Trade by main products More than half of Spain exports to the UAE consist of commodities, industrial products and capital goods. The exports of agro-foods and beverages items have increased during the last three years. In terms of value, the agro-food exports grew from 89 million € in 2007 to 124 million € in 2009 (28%) while the value of beverages that were exported increased by 796 million € (20%) during the same period (Table 1). Similarly, Spain import from UAE commodities and capital goods which alone accounted for 89% of overall imports. Plastics and Aluminum are the main imported items which make 21% and 37% respectively of overall imported articles between January and May 2010. Spain Investments with the UAE Data show that the Foreign Direct Investment received by Spain in 2009 originated primarily from the UAE and is estimated at 3.322 million Euros. The largest fraction of these investments are for the manufacture of coke and refined petroleum products (3.3 million Euros) followed by the construction of buildings (4 million Euros). Spain on the other hand contributed to the UAE 40 million Euros for the water transport and 18 million Euros for the manufacture of other metallic mineral products. Today, both countries endeavour to enhance economic and commercial ties and open up joint-business opportunities for both countries in different sectors with great development potential, such as environmental, water treatment and desalination, renewable energies, aeronautics, biotechnology and health sciences and information and communication technologies Trade Balance - Spain w ith United Arab Emirates Thousands Euros Exports Imports References: 1. “Dubai World Central and the evolution of Dubai Logistic Cluster” DIFC Economic Note No. 10, August 2010 available at http://www.difc.ae/index.php/download_file//view/1903/ 2. “Forecasting Tourism in Dubai” DIFC Economic Note. 8, February 2010 available at http://www.difc.ae/index.php/download_file//view/1733/ Balance 1,400,000.00 1,200,000.00 1,000,000.00 800,000.00 600,000.00 400,000.00 200,000.00 2007 2008 2009 Jan-May 2010 Imom UAE are primarily commodities and Table 1. Exports, Spain to United Arab Emirates by sector (in thousands euros) Main Sectors 2007 2008 2009 2010 Agro Alimentary Beverages Consumer Goods 88,951.1 3,735.5 300,962.2 105,107.7 4,051.4 343,818.7 123,663.5 4,531.4 294,102.9 14,453.5 10,044.8 9,632.0 Commodities, industrial products and capital goods 483,206.0 724,384.4 496,689.7 9,448.3 Total 876,854.8 1,177,362.3 918,987.4 43,578.5 Source: ICEX. Spanish Institute of Foreign Trade Table 2. Imports, Spain to United Arab Emirates by sector (in thousands euros) Main Sectors 2008 2009 2010 Agro Alimentary Beverages Consumer Goods 2007 188.1 1,621.9 16,737.7 603.2 30.1 15,690.4 670.7 335.3 7,762.4 473.2 566.0 3,201.2 Commodities, industrial products and capital goods 77,673.4 228,836.6 71,199.7 32,748.4 Total 96,221.0 245,160.3 79,968.1 36,988.7 Source: ICEX. Spanish Institute of Foreign Trade 2