“Dhaman”: Arab merchandise exports nosedived by 13.4% to $1.42 trillion in 2023

China maintained its lead as the region’s top trading partner accounting for 16% of overall Arab merchandise trade

The Corporation’s bulletin: Raw materials and energy made up 74%

The Arab Investment & Export Credit Guarantee Corporation revealed that Arab trade in goods and services plummeted by 3.7% to hit $3.4 trillion in 2023, due to the drop in exports by 9.2% to $1.8 trillion and the hike in imports by 3.3% to $1.6 trillion.

The Corporation explained in a press release on the occasion of issuing its second quarterly bulletin of 2024 at its headquarters in the State of Kuwait On October 6, 2024, that the drop in the value of merchandise trade by 7.2% to $2.61 trillion was due to the decline in merchandise exports in the region by 13.4% in 2023 to hit $1.42 trillion, while Arab merchandise imports grew by 1.6% to $1.2 trillion. The surplus of the merchandise trade balance consequently dropped by 50.8% to hit $232.1 billion in 2023.

The bulletin’s data showed that the share of Arab merchandise trade fell to 5.4% of the global total, and to 12.9% of developing countries’ total merchandise trade. In terms of merchandise distribution, raw materials of all kinds continued to make up the largest share of Arab countries’ merchandise exports by more than 74%, as fuel exports alone accounted for 58% of the total. Manufactured goods continued to represent the largest share of Arab countries’ merchandise imports with a share of more than 63% in 2023.

The bulletin noted that the geographical concentration of Arab merchandise trade continued in 2023, as four Gulf countries, Egypt and Iraq accounted for 78.5% of the total Arab merchandise trade, with the UAE alone having had more than 35% of the total.

As for trade partners, the bulletin’s data showed that the region’s top 10 exporting countries to the region accounted for about 55% of the total merchandise imports of Arab countries, while its top 10 importing form the region markets accounted for more than 57% of Arab merchandise exports. China maintained its lead as the region’s top trading partner accounting for 16% of overall Arab merchandise trade.

The Corporation explained that the value of intra-Arab merchandise trade rose by 4.1% to $223.2 billion during 2023, making up 8.5% of the total Arab merchandise trade, and being concentrated in four Gulf countries and Egypt with a share of more than 81% of the total.

Regarding the trade performance indicators during 2023, the bulletin indicated a decline in the performance of Arab countries in trade openness, propensity to export, export diversity and terms of trade with growing reliance on imports. But it advanced in the indicators of export concentration, the merchant fleet, and the liner shipping connectivity during the same year.

Given UN Conference on Trade and Development (UNCTAD) estimates that global trade in goods and services is expected to grow to approximately $32 trillion in 2024, Arab trade in goods and services is forecast to rise by 2.6% in 2024, based on IMF estimates, buoyed by expectations of a hike in imports by 6.1% and an Arab GDP growth rate by 2.6%. Taken into account the continued concerns about security risks in the Red Sea and the impact of the conflict in Middle East and Europe on the trade volume and global shipping costs.

Amid the escalation of political tensions in 2024 over the situation in Gaza, Lebanon, Yemen and Sudan, together with the continued reflections of the Russian-Ukrainian war, climate change and its effect on productive capacities, the Corporation emphasized that Arab countries’ trade benefits are contingent upon available opportunities of intra-Arab trade. They also hinge upon the countries’ ability to diversify their exports, cut their sectoral concentration in primary commodities, especially fuel products, curtail their geographical concentration in a limited number of business partners, and seek to open new markets.

In this context, the Corporation whose operations will hit $32 billion by the end of 2024 underlined that it would pursue its policy of promoting and backing efforts to boost Arab merchandise exports, and strategic and capital goods imports to the region’s countries through its various insurance services offered to exporters from the region and financial institutions that fund Arab trade, buoyed by its high credit rating, robust financial position and exceptional financial liquidity.