The UAE will be the principal Middle East beneficiary of the lifting of international sanctions on Iran as part of the Joint Comprehensive Plan of Action agreed between the Islamic republic and the US, China, Russia, the France, the UK and Germany last month, figures contained in the IMF’s annual article IV report on the emirates published last week show.
“At $12 billion, exports to Iran in 2013 accounted for 12 per cent of the UAE’s total non-oil exports, making Iran the UAE’s most important export destination after India,” the IMF said. “The UAE is well positioned to benefit from an opening of the Iran market by serving as a transshipment point for renewed trade activity.”
The IMF said that the reversal of sanctions could add 1 percentage point to real GDP growth each year in 2016-18 through higher non-hydrocarbon exports alone. This would be the result of higher demand from Iran for the UAE’s financial, transport, tourism and hospitality services.
About 550,000 visitors from Iran stayed in UAE hotels, mainly in Dubai, in 2010. This fell to 300,000 in 2013 mainly due to sanctions. There is evidence that the number recovered in 2014. More than 250,000 visitors from Iran stayed in UAE hotels in the first half of 2014, the IMF reported.
Results from a simulation model suggest that a reversal of sanctions could add 1 percentage point to “If sanctions are lifted, the additional indirect impact of spending by tourists and business travellers in the broader economy could be significant,” the IMF said.
Dubai has for more than a century been a major trading hub for Iran. About half a million Iranians live in the UAE and they account for around 5 per cent of the total population. About 8,000 companies backed or owned by Iranians are based in the emirates. Iranians are estimated to have invested up to $300 billion in the UAE, mainly in real estate.