UAE’s Diversification Strategy to Minimize Trade Risks

The UAE is expanding its comprehensive economic partnership agreements (Cepas) to shield its economy from potential trade wars and ensure uninterrupted access to global markets. According to Mohammed Alhawi, undersecretary at the UAE’s Ministry of Investment, the UAE aims to diversify its trade partners and sectors to minimize disruption. 

The UAE has signed Cepa deals with countries like India, Turkey, Indonesia, and Malaysia, granting market access to more than three billion people. The goal is to sign 26 Cepas, which are expected to add about 2.6 percent to the UAE’s economy by 2030. The ministry recently launched a white paper highlighting strong growth and future opportunities, focusing on attracting financial services businesses, family offices, hedge funds and private equity firms to the UAE.

The UAE’s ports in Dubai and Abu Dhabi and its extensive airline connectivity position it to remain resilient amid global disruptions. The nation is also riding on trends like micro-manufacturing and intends to build a platform where families and companies can prosper through investment in healthcare, transport and education.

The economy of the UAE expanded by 3.6 percent in the first half of last year with 75 percent of that coming from non-oil GDP. The UAE is making efforts to attract foreign direct investment (FDI) as part of its overall policy to move away from oil reliance. In 2023, the UAE drew $30.68 billion of FDI inflows that represents a growth of 35 percent annually.

In November, the UAE introduced a new plan to double total FDI to Dh1.3 trillion ($354 billion) by 2031. Plans include 100 percent foreign ownership of businesses, less visa restrictions and small and medium enterprise incentives. The UAE also targets financial services and manufacturing as main drivers of growth.

In general, the UAE’s proactive policy and emphasis on bilateral agreements aim to minimize trade risks and ensure resilience amid international challenges.