Japan's exports to UAE hit low

Japanese exports to the UAE in 2009 fell to their lowest level in three years as demand for cars and electronic goods collapsed. Although exports are expected to improve marginally this year, officials acknowledge that trade could be hit if sales from Toyota are further impeded by recalls. Japan's exports to the UAE fell to US$6.6 billion (Dh24.24bn) last year from $10.8bn the year before, figures from the Japanese government show. The UAE is the biggest market for Japanese exports in the GCC. With the country acting as a re-export hub for the region, the figures also indicate a decline in demand across the region for capital and consumer goods.

"We saw a sharp drop in exports due to the global financial crisis," said Kuni Funaki, the chief executive in the Middle East and North Africa for the Japan External Trade Organisation. "I hope for a recovery in trade in the UAE this year, but I'm not overly optimistic." Vehicles and vehicle parts, Japan's biggest exports to the UAE, experienced the largest drop, with exports declining by 68 per cent, from $4.8bn to $1.5bn. Exports of electrical goods dropped 21 per cent to $1bn.

Consumer sales of cars and electronic goods fell sharply last year as disposable income declined after the UAE was submerged by the global financial crisis. Asked about the likelihood of a slowdown in sales of Toyota models, Mr Funaki said: "If consumers started to worry about Toyota as a whole, it might happen." Analysts forecast negative consumer sentiment could still dent Toyota sales globally despite worldwide sales rising 15 per cent in January compared with the same period a year earlier. Safety concerns mean the company is recalling 8.5 million vehicles worldwide, the majority of them in the US.

In the UAE, Toyota accounts for about a third of the market. According to Toyota, 433,000 cars were sold across all six GCC states last year. Of those, 12,000 were manufactured in the US, where faulty parts in some vehicles led to recalls. Demand declined last year for other Japanese exports, including machinery and raw materials, due to a slowdown in the construction sector. Exports of machinery and mechanical appliances to the UAE fell 38 per cent to $1.1bn, with iron and steel products declining 40 per cent to $291 million.

Signs of a recovery in trade emerged in the latter months of the year, Mr Funaki said. "The month of May was the bottom for UAE exports, and we have seen a gradual increase in demand from June to December." Japan's exports to the UAE grew by 34 per cent from 2007 to 2008. The country's export-driven economy emerged from recession in the April to June quarter last year, but concerns have persisted about the strength of that recovery.

Globally, Japan's exports grew for the first time in 15 months in December, spurred by demand in Asia, and China in particular. [e-mail]