The ratings agency said on Sunday in a statement that the ratings on Abu Dhabi are anchored by its strong fiscal and external positions, which give it fiscal policy flexibility. Standard & Poor’s said the exceptional strength of the government’s net asset position also provides a buffer to counter the negative impact of oil price volatility on economic growth and government revenues, as well as on the external account.
S&P said: “Abu Dhabi is one of the world’s wealthiest economies; we estimate GDP per capita at $109,000 in 2013. We expect real GDP growth in 2012 to be around 4.5 per cent, premised on 6.4 per cent growth in oil output, together with four per cent growth in non-oil sectors.”
The UAE capital’s real economic growth accelerated to 6.8 per cent in 2011 , bolstered by strong performance in the oil sector, with oil production increasing by nine per cent to 2.5 million barrels per day, the agency said, adding: “Diversification efforts and government’s public spending have helped sustain non-oil economic growth at four per cent, boosted by activity in the financial, manufacturing and transport sectors.”
Assuming an oil export price of $110 per barrel in 2013, S&P estimates the fiscal surplus at 13.9 per cent of GDP, following an estimated surplus of 15.4 per cent including petroleum dividends and investment income in 2012.
“The stable outlook balances Abu Dhabi’s economic resilience and policy flexibility, resulting from its exceptionally strong external and fiscal net asset positions, against the risks emanating from structural and institutional weaknesses that could derail growth, as well as against its high contingent liabilities and limited monetary policy flexibility,” S&P said.