Abu Dhabi: The global economy is likely to recover from this year's virus-driven recession with 5 per cent growth in 2021, according to a top official at Abu Dhabi's $220 billion wealth fund.
The most likely outcome following the economic crisis sparked by the coronavirus is a "U-shaped" rebound, meaning there will be some stagnation before things get better, said Musabbeh Al Kaabi, CEO of the Petroleum & Petrochemicals division of Mubadala Investment Co. The fund - with holdings across healthcare, technology, aerospace and energy - gives that scenario a 70 per cent probability and sees a 30 per cent chance of a longer economic slump.
As the pandemic forced factories all over the world to shutter and people to stay home, the global economy has plummeted and oil prices have dropped by about half since the start of the year. But even as activity resumes, demand for crude is likely to peak within 10 years at most with the growing adoption of cleaner energy, Al Kaabi said.
No denial of what's in store
"We are not in a state of denial, we understand the energy transition," Al Kaabi said Wednesday, speaking in a virtual energy forum hosted by the Atlantic Council, a Washington-based think-tank. Energy markets will see stronger demand for natural gas and Mubadala is skewing its investments in that direction, he said.
The drop in crude has halted growth in US shale as many wells are not economic with prices below $35 a barrel, but it won't completely kill the industry, Al Kaabi said.
Mubadala's oil and chemicals unit has been selling assets after combining with another Abu Dhabi investment fund. In March, it sold part of plastics maker Borealis AG to Austrian partner OMV AG. Last year, the company sold a stake in its Spanish refining unit to Carlyle Group Inc.
Both deals were valued at nearly $5 billion each. The company has instead invested in gas fields closer to home in the last two years, buying stakes in deposits in Egypt.