Abu Dhabi’s Department of Economic Development expects a 3% growth in Abu Dhabi’s gross domestic product

The Department of Economic Development in Abu Dhabi (DED) expected that the compound growth rate of the gross domestic product of the Emirate of Abu Dhabi at fixed prices will reach 3.0% between 2018 and 2021, whereas the rate of compound growth in the oil and non-oil gross domestic product is expected to reach 1.6 and 4.2%, respectively.

This announcement was presented in the economic forecasts report for the Emirate of Abu Dhabi whose results were submitted by the DED during the sessions of the Fifth Edition of the UAE Economic Outlook Forum 2018 which was concluded today at St. Regis Hotel, Saadiyat Island under the patronage of His Highness Sheikh Hazza Bin Zayed Al Nahyan, Vice Chairman of the Executive Council of Abu Dhabi.

In its report the DED presented the most prominent challenges that the global economy has faced over the last years, most notably the trade’s inability to keep up with the growth in the domestic product, the slow productivity, and the instability of major economies of the world’s countries. The DED also explained the external factors and variables that impacted the local economy of Abu Dhabi which include: The external demand for non-oil commodities, oil revenues, the flows of indirect foreign investments and the local demand.

In the report, the DED stated that it hopes that the economy of Abu Dhabi would continue to achieve relatively stable growth rates over the next five years in light of the recovery of a number of economic activities in the Emirate. This growth leads the activities with high knowledge value which are targeted by Abu Dhabi Plan according to the determinants of Abu Dhabi Economic Vision 2030.

Specifically, the DED pointed out that among the most important economic forecasts for the Emirate of Abu Dhabi in 2018 were: The achievement of a high growth rate in the most important non-oil economic activities, particularly construction with 4.3 % growth rate, real estate activities with 3.7%, financial and insurance with 4.8%, manufacturing industries with 4.3%, business services with 5.1% and hotels and restaurants with 7.5%.

To explain the future prospects for Abu Dhabi’s economy in the period between 2018 and 2021, the DED presented the most significant economic developments that the Emirate’s economy has achieved during the period from 2012 to 2016 which it described as stable despite the external challenges and the slow performance of several non-oil activities.

Furthermore, the Department pointed out that the compound growth rate of the gross domestic product of Abu Dhabi at fixed prices reached 4.2% during the same period, whereas the compound growth rate of the oil gross domestic product at fixed prices in the Emirate reached 2.9% in the same period, and the compound growth rate of the non-oil gross domestic product at fixed prices reached 5.1% during the period between 2012 and 2016.

The DED’s report stated that the private sector’s share in the gross domestic product at current prices between 2012 and 2015 has reached 34% in 2015, whereas the percentage of non-oil commodity exports as a percentage of the non-oil domestic product at current prices reached 4.8% between 2013 and 2016. On the other hand, the non-oil commodity exports as a percentage of the gross domestic product at current prices reached 2.9% during the same period.

Moreover, the report pointed out that the direct foreign investment’s share in the Emirate has increased by a compound growth rate of 11.8% between 2012 and 2016 and explained that the manufacturing industries’ share in the total volume of direct foreign investment in 2016 reached 19 billion 182 million AED, whereas the share of the extraction industries (crude oil and natural gas) and the financial and insurance activities reached 9 billion 273 million AED  and 14 billion 762 million AED, respectively.

In this regard, the DED’s report explained that these figures reflect an important fact that emphasizes the continuous development and stability that the Emirate’s economy is experiencing. Abu Dhabi’s economy has become one of the economies that attract direct foreign investments after the leadership managed to enhance the competitiveness of the business environment and develop the non-oil projects.

In the presentation the DED explained that what sets the year 2016 and 2017 apart are those rapid developments that took place in the global oil market along with the increase of crude oil supply which was not met with adequate demand in that period which led global oil prices to drop to record levels.

Moreover, the DED emphasized that those figures and statistics reflect the strength and solidity of the foundations of the Emirate’s macroeconomics over the last period during which the global economy faced many shocks and geopolitical and economic challenges.

The DED also stated that the Emirate’s economy managed to succeed thanks to its leadership which worked on overcoming those shocks and challenges and properly utilized the oil surpluses to use them in enhancing the economic diversification efforts and develop the non-oil projects. This is exactly what the previous results confirm as they stated that the non-oil activities have achieve strong growth rates between 2012 and 2016 despite all the global and regional economic challenges.

Additionally, the DED stated that these data also reflect the extent of the Emirate’s economic attractiveness being a safe haven for investment and local and foreign capitals. It also reflects the trust of various international organizations, such as the top credit rating agencies, in the strength of the Emirate’s economy and its stability over the coming years.

Furthermore, the DED discussed the prospects of the Emirate’s economy in the period between 2018 and 2021 whereby it presented the main assumptions and inputs that are taken into consideration when preparing those predictions, most notably the rapid and successive developments in the global oil markets.

In this regard, the DED confirmed that the Emirate possesses solid reserves being the second largest sovereign fund in the world. This enables the Emirate to face and overcome any possible drops in oil prices and allows it to continue implementing its developmental plans and programs, in addition to the exceptional performance of the non-oil activities which, as we explained earlier, represent a huge support for the macroeconomics and reduces the chance of it being vulnerable to external shocks.

In addition to that, the DED’s presentation included a summary about the most important results of the periodic indicators that are based on opinion polls that the DED prepares in partnership with the Statistics Center in Abu Dhabi, such as the Consumer Trust Index, and the Trust in the Business Atmosphere Index which reflect high levels of consumer trust and the continuing trust in the business atmosphere in the Emirate.

Following that, the DED shed light on the main drivers of the economic growth during the future period between 2018 and 2021 by reviewing the future growth rates of several economic activities in light of the projects planned by the Emirate which are expected to commence in the next few years.

Among the most prominent projects which the report identified are: The Abu Dhabi International Airport Expansion Project, which is expected to be operational in 2019 with a total capacity of 84 million passengers annually. There is also Saadiyat Cultural District in which the Louvre Museum was opened which received more than 30 thousand visitors in the first week, in addition to the Riyadh City project which will accommodate 200 thousand people, Abu Dhabi Global Market, which is considered one of the world’s top ten financial markets, Baraka Nuclear Power Plant, which will be operational in 2020, with a total operational capacity that is equal to one fourth of the Emirate’s energy needs.