Abu Dhabi’s gross domestic product (GDP) nearly touched $100 billion in 2006, which marked a whopping 21.7% rise at current prices over the previous year. Given its population of merely 1.463 million, wealthy becomes an understatement in describing the emirate. A per-capita GDP exceeding $68,000 casts Abu Dhabi among the world’s wealthiest countries or city states such as Luxembourg, Ireland and United States. This figure is expected to further increase within the region of $91,000 in four year’s time if oil prices continue to perform in favour of oil-exporting countries like UAE, and if the population growth stays within the 4% to 5% growth range per annum.
Data Sources: Abu Dhabi Department of Economic Planning and Abu Dhabi Chamber of Commerce and Industry
Sources: Abu Dhabi Chamber of Commerce and Industry, Madar Research and International Monetary FundThe powerful oil sector contributed over $62 billion to the emirate’s GDP in 2006, dwarfing every other sector’s output including those of real-estate, finance and utilities. Going forward, however, the non-oil sector’s stake in the overall economy of the emirate is expected to gradually increase from 38% of the GDP in 2006 to around 45.0% by 2010, if an annual growth of 17% to 18% is realised for the non-oil sector. To reach this objective the government has embarked on major initiatives to re-invest its oil revenues – which have registered precipitous gains in recent years – on a broad spectrum of sectors particularly construction, tourism, electricity and water and industry.
Data Sources: Abu Dhabi Department of Economic Planning, Abu Dhabi Chamber of Commerce and Industry and Madar Research
Data Source: Abu Dhabi Chamber of Commerce and Industry and Madar Research
Looking back the emirate has posted an average GDP growth of 25% per year since 2002, with the years 2004 and 2005 growing by an estimated 31% and 38%, respectively. The year 2005, in fact, ended the 20-year long deficit in the country’s fiscal status. A more stable if not conservative GDP growth forecast of 12.3 % per year over the next four years will further bring the emirate’s total output to $159 billion by 2010.
The private sector in Abu Dhabi is also emerging, albeit steadily, as an economic growth engine contributing about 17% to the GDP in the past year. Such contribution is expected to reach one fifths of the GDP in the not so distant future, which could only bode well for the emirate’s vision to successfully diversify its economy and attract foreign investments, not so much for capital but for knowledge and technology-transfer.
In terms of foreign trade, Abu Dhabi’s total commodity exports (including re-export) was valued at roughly $64 billion in 2006 and is poised to grow by 8.3% in 2007. Total imports are forecasted to reach in excess of $15 billion in 2007, up from around $12.5 billion in 2006.
A healthy cash-flow, while extremely vital, is not the only dynamic in favour of Abu Dhabi’s economy however. The emirate has not incurred any direct debt in over a decade, which has prompted firms like Moody’s Investors Service to give it a very high credit standing rate.
Inflation
The remarkable year-on-year increase in the emirate’s GDP, and that of the rest of UAE, however is subject to inflationary factors, which admittedly are higher than world average. Inflation rate across UAE in 2006 ranges between 8% (International Monetary Fund) and 10% (UAE Central Bank). Real GDP growth in Abu Dhabi (based on constant 2005 prices) is about 8%, based on data generated by the Abu Dhabi Chamber of Commerce and Industry.
WTO
The accession of the UAE to the World Trade Organisation highlights the country’s commitment to a number of new policies and business practices designed to provide the highest levels of efficiency and security for investors and lending institutions alike. The marriage of these new business practices with the dynamic nature of the local economy and the ongoing deregulation in various high-value sectors such as telecommunications, all within a highly stable political and fiscal environment, is certain to create enormous new investment opportunities.
Abu Dhabi and UAE
Abu Dhabi contributed roughly 60% to the country’s GDP in 2006 despite accounting for only about 33% of the total population. It, however, continues to provide generous financial subsidies to the smaller emirates in the country.