Lifting sanctions on Iran is expected to allow Dubai to reclaim its traditional status as a hub for trade with and investment in Iran.
Substantially as a result of these expectations, the International Monetary Fund (IMF) is viewing Dubai’s economy with a high degree of confidence.
International economic sanctions imposed on Iran over its nuclear ambitions are expected to be lifted early next year.
But Iran’s own banks are unlikely to find it easy to write trade finance business for some time yet (AML Newsflow, 6 November 2015).
According to IMF estimates, the lifting of sanctions on Iran could add one percentage point to the UAE’s GDP growth between 2016 and 2018 by boosting non-hydrocarbon exports.
With its very strong trade ties to Iran compared with the other emirates, Dubai is expected to benefit the most from the easing of sanctions.
Dubai is certainly expected to profit from increased demand for trade finance, which the emirate provided extensively until sanctions on Iran bit very deeply.
Tourism and hospitality are also expected to benefit as Dubai will seek to attract hotel guests back – the number arriving from Iran has all but halved since 2010.
The IMF reckons the additional indirect impact of spending by tourists and business travellers in Dubai’s economy could be significant.
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