Atradius’ latest report analyses mutual trade opportunities following the normalisation of diplomatic and trade relations between Israel and the United Arab Emirates, assessing the prospects for long-term engagement.

Hongkong: The normalisation of diplomatic and trade relations between Israel and the UAE will unlock mutual trade opportunities given the complementary nature of the two nations’ economies, according to Atradius’ latest economic research report. Despite potential regional geopolitical tensions, cooperation between the two is likely to intensify in the long-term.

With recessions in 2020 behind them, the report notes that the economic growth outlook for both is relatively strong. Their economies are complementary in that they both have a GDP of around USD 400 billion and their relatively small populations enjoy high living standards. Both economies are well diversified, and the favourable business environment in each bodes well for developing an intimate trade relationship.

The report notes that in the first five months since their historic peace treaty, the two have conducted around USD 280 million in bilateral trade. Various sources estimate annual bilateral trade in the medium-term could range anywhere between USD 4.0 billion and 6.5 billion, equivalent to about 1.0%-1.5% of each country’s GDP.

Looking at each country’s relative comparative advantage, opportunities for the UAE include exports of perfumery, plastics, aluminium and cement & other construction materials. Israel has a strong comparative advantage in arms & ammunition, medical electro-diagnostic devices, chemical products and unfermented fruit and vegetable juices.

“The prospect of mutual benefit through a deepening trade relationship is evident,” noted Schuyler D’Souza, Managing Director Middle East, Atradius. “Due to pandemic-induced constraints on local and global demand, we expect to see a more immediate impact on some sectors like healthcare and agriculture, while other sectors, for example leisure and hospitality, will take some time to see growth boosted by the peace deal. But, overall, the normalisation presents enormous opportunities for the business communities in the UAE, and we are fully prepared to help exporters explore trade opportunities.”

Other key findings include:

Geopolitical risks also persist, the report notes. “Despite the risk of a temporary setback, the cooperation between the UAE and Israel that is currently being developed appears to be deep and broad-based,” noted Niels De Hoog, Senior Economist, Atradius. “It won’t be easily undone. Other Arab countries are following suit in reconciling with Israel, making individual backtracking more difficult, and the shared interest of maintaining a strategic partnership with the US is another political safeguard.”

Get the Atradius Economic Research Report here: https://atradius.sg/reports-and-services/israel-uae-trade-relations.html

About Atradius:

Atradius is a global provider of credit insurance, bond and surety, collections and information services, with a strategic presence in over 50 countries. The products offered by Atradius protect companies around the world against the default risks associated with selling goods and services on credit. Atradius is a member of Grupo Catalana Occidente (GCO.MC), one of the largest insurers in Spain and one of the largest credit insurers in the world. You can find more information online at www.atradius.com.hk

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