UAE Trade Surplus Dips on Lower Oil Price

Lower oil prices and production, allied with a sharp fall in bank credit to commerce and other sectors, depressed the UAE's trade surplus by about 59% in 2009 after hitting a record high level in 2008, official data showed.

From a peak of about US$63.5 billion in 2008, the surplus in the country's trade balance dived to about US$25.8 billion, a decline of nearly 59.3%, showed the figures by the Arab Monetary Fund (AMF).

The fall turned the UAE's current account surplus of about 8.8% of GDP in 2008 into a deficit of nearly 2.7%, said the Abu Dhabi-based fund, the Arab League's main financial establishment. "The sharp fall in the trade surplus turned a large current account surplus in 2008 into a deficit... the fall in the trade balance was caused by a large decline of nearly 32 %in the UAE's exports last year," the AMF said.

Its figures, based on UAE Government statistics, showed the country's total exports of goods slumped to nearly $US163 billion in 2009 from a record US$239.8 billion in 2008.

The report cited a sharp slowdown in bank credit and lower oil prices and output by the UAE for the large decline in exports last year. Oil prices tumbled by about 35% to an average US$62 in 2009 from a record high of US$95 in 2008 after oil demand was hit by the global fiscal crisis.

The UAE's crude output is also believed to have dipped by nearly 10% to an average 2.25 million bpd last year from 2.5 million bpd in 2008.

The drop was coupled with a sharp slowdown in credits by the country's 24 national banks and 28 foreign units because of the crisis and a debt default problem involving the Saudi Saad and Algosaibi family conglomerates.- Zawya, Business 24/7