International financial sanctions against Iran are hurting its trade with the United Arab Emirates, the UAE’s economy minister Sultan bin Saeed al-Mansouri said on Monday.
“Trade with Iran was always with consumable items...We should not really stop that. The issue is with the financial transactions...regarding that, it has been affected,” he told a news conference.
“If you want to export 20 tons of rice, the financial system does not allow you to do that.” Mansouri did not elaborate.
Banking sanctions led by the United States have made it legally dangerous for many banks around the world, including those in the UAE, to do business with Iran, making it very difficult for Iran to finance its foreign trade.
Dubai has been a major center for trade with Iran; re-export business between the two countries - goods sent to the UAE for on-shipment to Iran, and Iranian goods sent to the UAE for on-shipment to other countries - totalled 31.9 billion dirhams ($8.7 billion) in the first nine months of 2011, data from the UAE customs authority show.
The International Monetary Fund has estimated the sanctions could cost the UAE as much as 0.7 percent of gross domestic product if trade halts completely.
UAE economy’s growth
Meanwhile, the United Arab Emirates economy grew by 4.2 percent in 2011 but is expected to expand at just three percent this year as oil prices decrease.
Gross domestic product jumped from 1.3 percent in 2010 to “4.2 percent in 2011,” Mansouri told reporters.
The figure is slightly lower than the International Monetary Fund’s estimate, which expected GDP growth in 2011 to reach 4.9 percent.
Improved oil prices, in addition to expansion in non-oil sectors, notably tourism, contributed to the oil-rich state's rise in GDP, Mansouri said.
Oil sector revenues accounted for around 31 percent, while wholesale trade amounted to 13.5 percent. Tourism grew by eight percent.
The minister did not announce an official forecast for growth 2012, but estimated it would be “around three percent.”