We estimate that the merchandise trade surplus narrowed in 2010 but expect it to widen sharply in 2011 as both oil prices and production increase and growth in non-oil exports picks up. The value of exports will grow robustly in 2011-15, reflecting the increasing importance of non-oil exports as a result of the UAE's diversification programme. However, the rapid growth in the value of imports, especially in the second half of the forecast period, will restrict the increase in the trade surplus. The trade surplus will average a healthy 13.5% of GDP in 2011-15, although this is lower than in the historical period (2006-10).

The UAE will benefit from the unrest in Bahrain as banks move foreign staff into offices in the UAE, and, in some cases, relocate offices to the UAE. Services credits (mainly from tourism, business and financial services) are set to increase substantially. Income credits (mainly returns on the government's foreign assets) will also grow strongly but will be below the average in 2006-10. Economic diversification will also result in a strong increase in services imports. The growth in remittance outflows will remain modest in 2011 but will increase steadily over the remainder of the forecast period.

We expect the current account to remain in surplus throughout the forecast period. We estimate that the surplus narrowed to 2.1% of GDP in 2010 but expect it to widen to an average of 4.3% of GDP in 2011-15.