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Mahan Bolourchi, Euler Hermes GCC CEO
  • UAE exports to grow 6% in 2014, taking advantage of increasing demand from Asia – particularly in India, Singapore, Taiwan and Thailand
  • 3 out of 4 C-level executives attending the TCI Summit say common regulatory framework for financial disclosure should be mandatory
  • TCI summit survey shows participants are in favour of Chapter 11/insolvency rules for SMEs and corporates

Thanks to the UAE’s strong logistics and infrastructures, the UAE’s GDP is expected to grow at 4.2% in 2014 and 4.5% in   2015; while the country’s exports are expected to grow 6% in 2014 from $379 billion in 2013.

This is according to a report by Euler Hermes, the leading trade credit insurance provider in the world, and also the headline sponsors of the 2nd Annual Trade Credit Insurance Summit, being held at the Address Hotel, Dubai Mall from October 27-29, 2014.

Since 2007, Euler Hermes has been present in the UAE in partnership with Alliance Insurance PSC.

The UAE has generated total exports of $379 billion in 2013 and its exports are expected to grow a further 6% in 2014, taking advantage of increasing demand from Asia – particularly in India, Singapore, Taiwan and Thailand” said Mahan Bolourchi, Euler Hermes CEO for the GCC countries.

Mahan Bolourchi Euler Herme

Mahan Bolourchi Euler Herme

The UAE economy, the second largest in the Arab world after Saudi Arabia and the most diversified in the Middle East, is continuing on a high growth trajectory. Economic growth is expected at 4.2% in 2014 and about 4.5% in coming years.

While the economy grows and new market opportunities increase, so as the market risk factors do, such as higher risk of bad debt, increased payment arrears, fluctuations in cash flow, limited access to funding (SMEs), fast market expansion, and lack of information on financials.

Small Medium Enterprises (SMEs) are particularly at risk because of their limited financial base and liquidity. SMEs need to take short-term credits to meet cash flow requirements, and they also have limited access to finance and quite expensive interest rate. SMEs also face the risks of delayed payment, administrative cost of collecting, limitation of in-house risk management experts, and limited access to reliable information.

Bolourchi highlighted the financial consequences of unpaid debt and the importance of trade credit insurance (TCI) in the economy. “A loss or non-payment event can have a devastating impact on a company’s profits. Depending on profit margins, the additional sales required to offset the loss have the potential to significantly slow future growth” he said.

The importance of trade credit insurance was confirmed when Bolourchi asked the audience, and as many as 73 per cent of the C level executives attending the TCI Summit indicated that trade credit insurance (TCI) contributes towards economic growth and should become and integral part of economic life in GCC and the Middle East region.

Trade credit insurance accelerates economic growth. It helps maintain the cash flow which will lead to growing business and increasing trading activities,” he said, adding that “compared to last year, global insolvency index has decreased by 8 per cent this year. However it is still 13 per cent above the pre-crisis level.”

When asked whether the UAE should activate/implement Chapter 11 or Insolvency rules for SMEs and corporates with immediate effect, 52% of the TCI summit attendees said they strongly agree with the statement.

Almost three-fourths (74 per cent) of the survey participants think it should be mandatory to have common regulatory framework for financial disclosure, which would attract more investors to the region, especially in light of economic developments towards Expo 2020.

With regard to Saudi Arabian economy, Euler Hermes forecasts that the kingdom’s GDP is projected to grow at 4.5% in both 2014 and 2015.Total exports of $376 billion in 2013 are expected to grow by more than 4.5% in 2014.

Trading activities in fertilizers, gas, organic chemicals, petroleum and related materials, and plastics connect the Kingdom to global markets. In 2015 China, India, Japan, South Korea, Taiwan and the USA are expected to remain its largest trading partners.

Global Banking & Finance Review


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