Abu Dhabi: The slump in oil prices that began in mid-2014 is likely to continue in the foreseeable future, with oil prices expected to be challenged in the short-term by an increased supply from fracking (the process by which oil and gas are extracted from shale rocks).
According to the latest report by Abu Dhabi’s Department of Economic Development (ADDED) that was released Tuesday, oil prices will also be challenged in the longer term through efficiency gains from solar and battery technology.
“On the supply side, rising unconventional oil production enabled by new technologies and increasing production of biofuels have contributed to excess resources. On the demand side, China’s slowing economic growth has meant a double-digit decline in its import commodity growth. These underlying dynamics mean the slump is likely to continue in the foreseeable future,” the report said.
Such low oil prices will create headwinds for oil-exporting countries in the Middle East and North Africa (Mena), compounding other political and structural issues.
However, the report said indicators such as government budget balance, government debt, and foreign exchange reserves show that the UAE is the lowest-risk GCC country in terms of economic stability.
The Abu Dhabi Competitiveness Report also said the UAE’s reported financial reserves reached $76.8 billion (Dh281.9 billion) in 2015 — an increase of over 60 per cent since the $48 billion recorded in early 2013.
Meanwhile, assets under management by the emirate’s sovereign wealth fund, Abu Dhabi Investment Authority, were reported to be over $773 billion — more than tenfold the country’s financial serves.
As for economic growth, ADDED said in its report Abu Dhabi’ real gross domestic product growth rate has been at an average of 4.6 per cent since 2005.
