Abu Dhabi “among the wealthiest economies in the world”
The financial scorecards are up and Abu Dhabi’s gone and landed an ‘AA/A-1+’ grade from Standard and Poor’s - just shy of the rating agency’s top mark of ‘AAA’.
The credit rating giant estimates that the Abu Dhabi government’s “substantial net asset position” is 191 per cent of GDP for 2012.
Standard and Poor’s labelled the emirate “among the wealthiest economies in the world” in its latest report published yesterday - estimating GDP per capita at $110,000 this year.
“The exceptional strength of the government’s net asset position provides a buffer to counter the negative impact of oil price volatility on economic growth and government revenues,” stated the ratings report.
Standard and Poor’s said government spending in Abu Dhabi “rose by an annualised 19 per cent in 2008-2011 in response to the global credit crisis.” This was to meet higher social and public infrastructure needs both in Abu Dhabi - and the northern emirates.
It expected real GDP growth in 2012 to be around 5 per cent - a figure based on 6.4 per cent growth in oil output, together with a 4 per cent growth in non-oil sectors. The report noted that the new oil pipeline between Abu Dhabi and Fujairah was an attempt to combat being located “in a geopolitically difficult region.”
The 1.5 million-barrel-per-day crude pipeline will allow the UAE to export close to one-half of its oil output outside of the Straits of Hormuz. The Standard and Poor’s report added: “The leadership in the UAE is highly focused on domestic stability and security.”
“The underpinnings of domestic stability are strong: Emiratis constitute a fairly homogenous demographic, which is largely supportive of the federation, and we understand that they believe the welfare system and other support from the government will safeguard their wellbeing.”
The ratings report from Standard and Poor’s concluded: “We could consider raising the ratings if there were significant improvements in transparency and governance, better availability of financial and economic data, and progress in institutional reforms.”