Abu Dhabi’s economy witnessed 15.9 per cent growth last year
Analysis of Abu Dhabi’s economy 2010
The Statistical Yearbook from Statistics Centre Abu Dhabi (Scad) 2011 reports that Abu Dhabi?s economy has overcome the repercussions of global financial downturn.
The emirate’s economy posted record gains of Dh85 billion for 2010. The GDP at current prices rose to Dh620.2 billion, which is up by 15.9 per cent from Dh546.5 billion.
The non-oil sectors witnessed a noticeable increase of 5.6 per cent, while the contribution of oil was 49.7 per cent last year.
Abu Dhabi had laid out plans to diversify its economy and reduce its dependence on oil as its main source of funding. This contributed 44.6 per cent to the emirate’s GDP in 2009.
The fluctuations of the oil prices have an effect on the contribution of the oil sector to GDP. Higher the oil prices, higher its contribution to the GDP and vice versa.
Abu Dhabi produces, on an average, 2.3 million barrels per day of crude oil and 4,847 million cubic feet of natural gas per day. Abu Dhabi forecasts higher GDP at ?$197 billion this year. Giyas Gokkent, group chief economist at the National Bank of Abu Dhabi, said “Higher oil price will be a driver in 2011 growth as well as higher output [total UAE oil production during January-April 2011 estimated up 7 per cent year on year] and modest pick-up in non-oil activity.” UAE economy expert Mohammad Al Asoomi also commented that the non-oil sector “is picking up well”.
“There are many heavy investments happening in that area,” he said. “There are heavy investments in the petrochemicals field in Ruwais for instance, heavy investments in aluminium.”
Emirates Aluminium (Emal) has already announced its plans to spend $4.5 billion (Dh16.51 billion) to double its output in the used metal industry.
Abu Dhabi is ranked sixth worldwide in terms of proven oil reserves, and accounts for 8 per cent of Opec’s production. In terms of natural gas reserves, the country is ranked seventh worldwide.
There are two refineries in Abu Dhabi, with a combined refining capacity of 600,000 barrels per day. A third refinery is in the pipeline in the emirate of Fujairah with a capacity of 300,000 bpd.
Abu Dhabi has become a very attractive place for businesses and investments. According to investment statistics for last year, the total number of registered business reached 96,381 in 2010 compared with 86,402 in 2009, of which 10.4 per cent were newly licensed.
Consumer prices in Abu Dhabi soared by more than 3 per cent last year with housing, utilities and food and drink in the lead.
The inflation in Abu Dhabi was 3.06 per cent last year, driven by price increase in several sectors including housing, water, electricity, gas, food, non-alcoholic beverages and fuels. Inflation has been rising steadily. For the current year, Scad’s statistics have shown consumer prices increased 2.4 per cent in June.
Government has taken adequate steps to curb inflation. Beginning of the year, the Ministry of Economy had introduced cap on prices of certain products, which they hope will result in more competition and eventually a fall in food prices.
“The non-oil sector is growing relatively well,” said Said Hirsh, the Middle East economist at Capital Economics. “The Government has handled its reserves well to invest in Abu Dhabi and help attract foreign companies,” he said.
Non-oil activity accounted for more than half of growth, contributing 50.3 per cent of GDP. Mining and quarrying, which include oil production, rose 28.9 per cent in current prices. Financial sector activity rose by 14.4 per cent, manufacturing 10.8 per cent, property and business activity 6.4 per cent, wholesale and retail trade and repair services 5.3 per cent, and hotels and restaurants 4.6 per cent.
Overall, salaries for workers in Abu Dhabi last year rose 9.1 per cent to Dh117.4bn.
A key to driving faster growth in the non-oil economy is stronger bank lending to the private sector. Bank lending rose 3 per cent on an annual basis , while the loan growth remained weaker in Saudi Arabia and Qatar.
Bank deposits last month rose to Dh1.12 trillion, up 10.9 per cent from June last year.
Last month, “M2” money supply, an indicator of future inflation pressures, rose at an annualised rate of 12.5 per cent. “M3”, the broadest measure of money supply, increased at an annual rate of 12.4 per cent last month.
Abu Dhabi is back on the track with robust GDP growth. Under Abu Dhabi’s Economic Vision 2030, the government has undertaken initiatives to reduce the country?s dependence on oil. As a result it has invested in non-oil sectors such as tourism, finance, industry, and property. Non-oil activity accounted for more than half of growth, contributing 50.3 per cent of GDP.
Abu Dhabi has become a lucrative place for businesses and investments. Government has also taken adequate steps to curb inflation. With economy diversifying and non-oil activity picking up, experts expect a noticeable increase in GDP.
Source: Gulf News, The National