UNITED ARAB EMIRATES

RB: The Russian invasion of Ukraine is having mixed effects on the UAE. On the one hand, the conflict has had a significant impact on global trade, especially for energy and grain importers, for which Russia and Ukraine are important suppliers. Moreover, current restrictions in the Black Sea, which serves as a major hub for wheat and corn, have effectively shut down the world’s second-largest grain-exporting region. The UAE is heavily reliant on grain supplies from that region and will need to find alternatives, but it has the ability to do so. Moreover, the UAE’s non-oil sector is considerably exposed to recent global developments – including the aftermath of the pandemic – and the recovery in tourism is likely to be affected by the war in Ukraine.

On the other hand, the conflict also offers economic opportunities for the UAE. The strong rise in global oil and gas prices and demand for alternative sources of hydrocarbons will provide short-term fiscal and export profits to the UAE, with spillover effects on domestic liquidity and privatesector economic activity. This coupled with the UAE’s strong policy response during the pandemic should support growth prospects.

JM: The UAE has recovered remarkably well from COVID due to its position as a dominant regional trade and logistics power. Petroleum and petrochemical industries, along with niche sectors such as precious stones and gold, make up the majority of its trade, both in exports and imports. In 2022, the UAE exported $201.7 billion of mineral fuels, $46.1 billion of precious stones and gold, $12.2 billion of aluminium, and $8.4 billion of plastics.

The UAE has a diversified petroleum buyer network, with $43.5 billion exported to Japan, $39.9 billion to China, and $27.3 billion to India in 2022. The UAE imported $39.6 billion of electronics, $39.5 billion of precious stones and gold, and $31.7 billion of machinery. In 2022, total exports increased to $325.6 billion from $232.2 billion, with the top markets being India, China, Japan, Thailand, and Iran. Meanwhile, imports rose to $273.9 billion from $223.8 billion, with China, the US, Japan, Germany, and the UK being the top sources.

RB: The countrywide halt to offensive military operations brokered by the UN has led to a 90% reduction in the reported fatalities associated with confrontations between the Houthis and forces loyal to the Internationally Recognised Government (IRG), compared to the six months before the truce. The mechanism set in place by the UN provided important channels of communication to de-escalate the conflict, but it did not tackle the several drivers of violence at a micro-level.

Even if the truce is renewed, violations would likely rebound in the absence of trust-building measures aimed at promoting political dialogue between the warring parties. However, the failure to renew the truce agreement suggests the conflict could become increasingly intractable, with the prospects of another truce or longerterm negotiated settlement becoming ever more challenging. The conflict still has the potential to return to, or potentially exceed, previous levels of violence.

JM: Despite being one of the poorest countries in the Middle East and Africa and facing conflict, Yemen has a niche oil and gas export industry worth $1.1 billion in 2022, with fish and crustaceans as the next biggest export category at $192.2 million. Its top export markets for the latter were Saudi Arabia, Egypt, Malaysia, and Thailand. However, Yemen runs a big trade deficit due to the need to feed its people. Its top import category is cereals, worth $1.9 billion in 2022, followed by iron and steel, plastics, and cars and trucks.

Yemen depends on Saudi Arabia and the UAE for humanitarian support, although it has recently clashed with the former. In 2022, exports increased to $1.9 billion from $1.8 billion, with China, Thailand, India, Saudi Arabia, and Italy as the top markets. Meanwhile, total imports rose to $10.6 billion from $9.7 billion, with China, Saudi Arabia, Turkey, India, and the US as the main sources of imports.