12.3% growth in UAE's digital trade between 2023-2028, research paper shows

UAE

The Ministry of Economy and the Abu Dhabi Chamber of Commerce and Industry (ADCCI) have issued a new joint paper revealing that trends project the growth and prosperity of digital trade activities in the UAE at a compound annual growth rate of 12.3 percent between 2023 and 2028. The research showed that more than 40 percent of consumers in the UAE relying on the “buy now, pay later (BNPL)” models and FinTech digital technology systems.

The paper titled “Introducing Trade by Modern Technological Means: Economic Outlook and Federal Decree-Law No. 14/2023 - BEI Research 360° Paper", showed that digital trade in Abu Dhabi is witnessing remarkable growth. This comes in light of the ambitious visions and plans of ADCCI to enhance the private sector’s contribution to the local economy through innovation and digitisation, and to strengthen the position of the Emirate of Abu Dhabi as a leading destination for business and talent in the Middle East and North Africa (MENA) region by 2025.

The study provides valuable economic insights into the most prominent factors that contribute to driving growth in digital trade, including various economic and commercial activities and the effects of current policies and laws. It also provides a comprehensive historical overview of the digital trade movement across several local, regional, and global geographical levels.

Ahmed Khalifa Al Qubaisi, CEO of ADCCI, said, “The new research paper produced in collaboration with the Ministry of Economy serves to strengthen the Chamber’s position as a leading partner in the process of digital transformation in the business world. It aligns with the Chamber’s strategy for digital transformation, aimed at attracting talent and expertise, exploring technological solutions, and integrating advanced AI technologies and tools, such as Microsoft Copilot, into the current operational system at the Abu Dhabi Chamber. This integration is intended to boost the level of productivity, improve the completion of daily tasks, increase customer satisfaction, and support the efforts of local and global businessmen and entrepreneurs.”

“The Abu Dhabi Chamber continues its endeavours to enhance the quality of initiatives and projects dedicated to the private sector. It employs various smart systems to analyse and process accurate data, as well as develop operational processes. This approach aims to bolster sound decision-making and the formulation of effective strategic plans aligned with the aspirations of the business community in Abu Dhabi.

"It also enables its members to keep up with local and global trends while aligning with national efforts to foster a culture of innovation within the context of advancing and achieving sustainable economic development,” he added. The research paper provides a detailed overview of local, regional, and global regulatory frameworks and policies, key agreements, and the role of major international bodies such as the World Trade Organisation in shaping the movement of traditional and digital trade, It also highlights new e-commerce practices that shape current trade dynamics.

The research paper also focuses on the importance of Federal Decree-Law No. 14/2023 regarding trade by modern technological means, and other laws and policies issued by the UAE, which reflects the keenness of both the Ministry of Economy and other local authorities to enhance the digital trade movement at a country level.

The paper reviews the efforts of the Emirate of Abu Dhabi in the field of e-commerce. It highlights the increase in the number of commercial companies engaging in cross-border exchange of goods, services, and data through modern technologies. These companies also offer consumer services and devices utilising advanced digital systems. Between 2022 and 2023, the number of registered e-commerce companies in Abu Dhabi increased by 12 percent.

The Mubdiah and Tajer Abu Dhabi economic and electronic licences accounted for the largest share of those registered companies. The research paper pointed out that the UAE achieved the third-highest level in terms of digital trade in the world by the end of 2022. The paper also showed that online shopping services in the MENA region are expected to witness further growth in the coming years. There is an expectation that indicates that the total value of the digital trade market in the MENA region may rise to about US$57 billion by 2026, with total digital trade rising from 5.7 percent in 2022 to 8.3 percent in 2026.

The research paper revealed that about 49 percent of consumers in the UAE shop online frequently, with about 47 percent of the population relying on credit cards, which is much higher than the global average of 18 percent.

The research paper stated that it is expected that 20.1 percent of total global retail purchases will be completed online in 2024, while digital retail activity is expected to constitute about 25 percent of total global sales by 2027.