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Increased trade and financial flows in the wake of the July Iran nuclear deal, will boost the UAE, and particularly its trade hub Dubai, the IMF says.
Dubai already has a role in facilitating trade, including oil trade, to and from sanctions-hit Iran.
The lifting of sanctions is also expected to lead to an expansion of Iranian demand for goods and services from the UAE, a major hub for the region, even with the modest downside risk for oil prices resulting from increased supply, the IMF adds.
Official UAE exports to Iran were worth $12bn in 2013, accounting for 12% of the UAE’s total non-oil exports. This made Iran the UAE’s most important export destination after India. After growing steadily for several years, these exports levelled off and declined with “the intensification of sanctions and enforcement efforts since 2010-11,” the IMF notes. The UAE is a key transshipment hub: exports to Iran consist largely of re-exports. The IMF calculates from a simulation model that the reversal of sanctions could add 1 percentage point to real GDP growth over the period 2016-18 through non-hydrocarbon exports alone.
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