UAE economy moving in right direction

The UAE economy is moving in right direction and Dubai looks confident to repay about $10 billion debt due this year, according to senior executives of Standard Chartered. “…. We are comfortable that the government is doing all the right things and broadly we are pretty optimistic about this year,” Jonathan Morris, chief executive officer, Standard Chartered UAE, told reporters at a news conference on Sunday, which was held to talk about the UAE-Korea trade corridor and the role of banks in supporting it. Speakers include Jonathan Morris, chief executive officer, Standard Chartered UAE; Richard Hill, chief executive officer, Standard Chartered Korea; and Shady Shaher, Senior Economist at the bank for MENA region. “We are very confident about the UAE economy, although we would be concerned if there was a headline event which hit confidence,” Morris said. Talking about the Dubai’s ability to repay the emirate’s debt this year, he said: “We think the government is doing all the right things and exploring all options. I don’t see why they won’t be able to roll over their debt.” Dubai’s government-owned entities have about $10.3 billion of debt maturing in 2012, according to Bank of America Corporation Merrill Lynch recent estimates. The media roundtable also saw the launch of “UAE-South Korea – Connecting Trade Corridors”, a research report authored by Standard Chartered economists Shady Shaher and Eunhye Yoon. Total bilateral trade between the UAE and South Korea is expected to grow more than 20 per cent to $26.6 billion in 2012, according to Standard Chartered Bank estimates. The UAE is South Korea’s largest export market in the Middle East and trade between the two countries expanded by 24 per cent to $22 billion last year. “We believe the UAE-South Korea relationship has potential to expand in a number of areas,” according to the research report. “The shifting balance of economic power from West to East is leading to the emergence of new trade and investment corridors between the Middle East and Asia. This is exemplified by the growing “trade corridor” between the UAE and South Korea which is being driven by the unique strengths of both economies,” Morris said. The bank estimates the UAE-South Korea trade will grow by an estimated 21 per cent to a record $26.6 billion in 2012 mainly driven by three factors — higher oil exports, a rebound in consumer demand for electronic and automobiles, and rebound in imports of goods for the construction industry. The UAE’s imports of electronics from Korea grew from $538 million in 2000 to almost $1.8 billion by 2011, while automotive imports grew from $55 million to $843 million over the same period. Trade between the two countries collapsed following the 2008 financial crisis, falling by 42.8 per cent in 2009. Yet by 2011, total trade between the two countries had rebounded to about 88 per cent of its 2008 value. The UAE and South Korea are now linked by a ‘trade corridor; - a strong link driven by trade and two-way investment that builds on the unique strengths of both economies. “We see scope for the UAE to increase its investment in Korea’s technology sector, especially as Abu Dhabi aims to build knowledge-centric, engineering-driven sectors under its economic diversification plan,” they said. “We also see the potential for stronger trade links between the countries — Dubai, with its large and expanding logistics infrastructure, is well positioned to serve as a gateway for trade between Korea and the fast-growing GCC region,” they added. Korean companies are involved in key projects in the UAE, from nuclear energy to oil and gas. In the latest milestone in the countries’ economic relationship on March 5 the UAE and South Korea announced a 30-year $2 billion agreement for two Korean companies to develop three oilfields in the emirate of Abu Dhabi. Korean constructors are bidding for some of the largest pending projects in the UAE, many of which will be awarded this year and estimated to be worth more than $13 billion. Korean firms are well positioned to win contracts for three main reasons — advanced technical expertise, ability to compete on price, and the importance the UAE places on its relationship with South Korea. Between 2005 and 2011, the UAE public and private sectors awarded close to $55 billion of construction orders to South Korean companies, according to official data from Korea.