Why Saudi Arabia and the UAE May be the Next Trade Powerhouses

Why Saudi Arabia and the UAE May be the Next Trade Powerhouses

As anyone who has recently flown from the US or Europe to Asia will know, Dubai has become an increasingly popular stopover point, and it has also become a popular destination in its own right. This is due in no small part to its convenient and strategic position straddling multiple continents and cultures.

And its neighbor Saudi Arabia is currently shifting its economy away from a sole focus on natural resources and towards an emphasis on general trade and commerce.

So while China, Europe, and the United States garner most of the attention at the intersection of logistics and commerce, Saudi Arabia and the United Arab Emirates are beginning to emerge as trade powerhouses due to their commercial potential and logistics capabilities.

Although they are two separate countries (as any proud Saudi or Emirati will tell you!), both sit on the Arabian Peninsula and are beginning to leverage their geographic location and natural resources -- making them prime movers in technology innovation in transport and logistics.

Here are a few more useful facts and insights if you are currently, or contemplating, doing business in this rising trade region.

Saudi Arabia

With an estimated GDP of US $646 billion and more than $150 billion of annual imports, Saudi Arabia is an attractive market for exporters and logistics service providers around the world. Leading institutes, including the World Economic Forum, consistently rank Saudi port infrastructure highly for quality of facilities and accessibility.

While the oil industry remains the primary driver of Saudi growth, in recent years it has also becomes a crucial market for ecommerce companies in the Middle East region.

Despite a relatively small population size compared to regional neighbors like Egypt and Turkey, Saudi Arabia is a compelling market for goods and services because of its high per capita income and strong preference for foreign goods such as automobiles and fashion merchandise.

Culturally, Saudi Arabia is a conservative country, but political and social innovations have begun to emerge, and with it, economic diversification that makes it less reliant on oil. Combined, analysts say these elements are likely to allow the Kingdom to emerge as a more robust consumer society and trading power in the years to come.

United Arab Emirates

A collection of seven separate city states on the Southeastern corner of the Arabian Peninsula, the UAE is one of the most significant logistics markets in the world. The economic powerhouses of the UAE are Abu Dhabi, which controls some of the largest oil reserves in the world, and Dubai, a dynamic city that has re-fashioned itself several times over as a leading trading hub for not only the Middle East, but for Central Asia, East Africa, and the Indian Subcontinent.

Dubai is home to the Jebel Ali Port, one of the 10 busiest ports in the world, and has become a logistics hub for the entire region as a result. As commerce is vital to Dubai’s DNA, it should come as little surprise that it is the home of regional ecommerce heavyweights Souq.com and Noon.com.

Read more: The Top 20 Global Freight Ports Infographic

Dubai, while still a generally conservative state, has more fully embraced commercial culture and international trade, boasting extravagant shopping malls and a steady stream of jet-setters passing through. Its world-class infrastructure and location make it a natural trading hub for not only its neighboring 350 million Arab neighbors, but also for nearly two billion other customers from Kenya to Kazakhstan, India to Iran.

What’s especially important about the emergence of these two trading nations is that it’s a broader illustration of how we’re moving from a world of one trading superpower (US), to two “super-regions” (US and East Asia), to a multi-polar world where any region, with the right investment, can claim a meaningful share of global trade.

Geography, infrastructure, and culture are important factors here, but the one thing that will begin to matter most is technology. Tech is the great equalizer: Data drives the frictionless exchange of information, and automation drives vast efficiencies regardless of location. Of course, it still matters where you are located on the globe. But with supply and demand of goods expanding everywhere, nearly every city on every continent can seize the tech opportunity to become a trade powerhouse.

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By: Fauad on Feb. 22, 2018, 3:01 p.m.