Oil revival lifts Abu Dhabi’s 2010 nominal GDP 16 percent
Abu Dhabi’s nominal economic output rose 15.9 percent in 2010, after shrinking nearly a quarter in the previous year, helped by recovery in its key hydrocarbon sector, the Gulf Arab emirate’s preliminary data showed Sunday. The United Arab Emirates member, which sits on 10 percent of global oil reserves and accounts for 90 percent of UAE oil output, felt the pinch of the global financial crisis in 2009 after crude prices tumbled from 2008 record highs. With an oil price recovery in 2010, the crude-reliant Abu Dhabi economy picked up speed again to see its nominal gross domestic product rise to 620.3 billion dirhams ($169 billion), Abu Dhabi Statistics Centre’s (SCAD) yearbook showed.
However, Abu Dhabi’s GDP, which makes up 57 percent of the UAE economy, is still below the 705.2 billion dirhams seen in the oil and property-boom year of 2008. “High oil prices and government stimulus spending should ensure relatively strong nominal GDP growth for 2011, alongside the ‘safe haven’ effect from the first quarter,” said Liz Martins, senior MENA economist at HSBC in Dubai. “However, our PMI survey suggests that momentum may be on the wane in the private sector.”
The statistics office did not release real GDP data for Abu Dhabi, whose performance had suffered from last year’s debt troubles in neighboring trade and business hub Dubai. The UAE, the second-largest Arab economy and the world’s No. 4 oil exporter, booked real GDP growth of 1.4 percent in 2010 after a 1.6 percent contraction in the previous year.
UAE Economy Minister Sultan bin Saeed al-Mansouri reiterated Sunday his June 3-3.5 percent forecast for the country’s GDP growth, saying the outcome depended on oil price moves and that the risk of another global recession was a worry. Analysts polled by Reuters in June expected UAE economic output to expand by 3.7 percent in 2011 with sluggish bank lending and weak property sector seen as the main drags. However, growth in UAE non-oil business activity plunged to a 15-month low in August, signaling a worsening in global conditions. Brent crude prices have been floating between $92 and $127 per barrel this year.
Mansouri also said that there was no need to further boost government spending – a key tool to steer the UAE economy with the dirham currency pegged to the U.S. dollar. “There is no need to boost fiscal spending. In the UAE, we have spent a lot on infrastructure and these investments are going on,” he told reporters on the sidelines of a financial forum in the capital Abu Dhabi. Most of the UAE fiscal spending occurs at the level of individual emirates, mainly in Abu Dhabi, which accounts for 71 percent of the total.
Abu Dhabi spent 245.5 billion dirhams in 2010, according to the International Monetary Fund. Its 2011 budget figures are not available. The UAE has escaped popular unrest, which rocked nearby Bahrain and Oman in February and March, but like its fellow oil exporters it pledged to spend heavily on social measures, including $1.6 billion in less-developed northern emirates.
In Abu Dhabi, hydrocarbon sector output grew by 28.9 percent at current prices in 2010, contributing to nearly half of the emirate’s GDP, after a 42.1 percent slump in 2009. Per-capita income in Abu Dhabi, home to nearly 2 million people, rose to 315,300 dirhams in 2010, one of the highest in the world, from 293,100 in the previous year.
Exports of crude, gas and oil products surged 41.4 percent to 278.1 billion dirhams last year. They account for more than 92 percent of total exports and 45 percent of Abu Dhabi’s GDP,
The UAE, along with some other OPEC members such as Saudi Arabia, increased its oil output this year to compensate for a production drop in strife-torn Libya. Abu Dhabi, which plans to trim its dependence on oil by investing billions of dollars in industry, tourism and infrastructure, produced an average 2.255 million barrels of oil per day last year, up from 2.189 million in 2009.