The United Arab Emirates and Turkey signed an agreement in Abu Dhabi on Friday which aims to increase trade between the two countries to $40 billion in the next five years, according to UAE projections.

Speaking in Istanbul ahead of a press conference in Abu Dhabi, Turkish President Tayyip Erdogan, said the Comprehensive Economic Partnership Agreement (CEPA) will take economic and trade relations between the two countries to a new phase.

The UAE kicked off negotiations with Turkey on a bilateral trade deal last year after a warming in political relations following UAE President Sheikh Mohamed bin Zayed's visit to the country in 2021, during which the UAE set up a $10 billion investment fund.

"The $10 billion fund is attracting a lot of investments from the UAE, but at the same time this CEPA will open more doors, because there will be proper mechanisms for choosing projects and investments," Thani Al Zeyoudi, UAE minister of foreign trade told Reuters in an interview.

"Turkey has huge potential for growth. They will be one of the biggest emerging economies dominating global markets 20 years from now."

Ratification of the deal is expected in the second quarter of 2023 with implementation to follow soon after, Al Zeyoudi said.

The CEPA is expected to focus on strategic sectors such as agritech, food security, and clean energy, as well as continued cooperation on construction and real estate projects.

Bilateral trade between the two nations hit $18.9 billion last year, up 40% from the previous year, and Turkey is now the UAE's sixth largest trading partner for non-oil trade.