Abu Dhabi: Abu Dhabi’s Gross Domestic Product (GDP) is expected to grow at a rate of around 2-3 per cent this year, marking a steady performance compared to 2015, according to IHS, a US-based information provider.
During a seminar held jointly by IHS and the Abu Dhabi Chamber of Commerce and Industry on Monday, Dr Ralf Wiegart, IHS’s director of Economics and Country Risk, said that he expected economic growth in Abu Dhabi to reaccelerate in 2017.
He added that he expected the emirate’s budget to be balanced by 2018 as structural reforms such as Value-Added Tax are introduced and oil prices pick up.
In December 2015, a spokesman from the Abu Dhabi Department of Economic Development, said he expected the emirate’s GDP to grow at a four per cent rate in 2016.
Discussing the impact of lower oil prices, IHS’s Wiegart said that the risk was that Abu Dhabi’s private sector could be caught in a double whammy from slower economic growth and lower government spending in the UAE along with weaker export markets.
Meanwhile, Mohammad Al Muhairi, director general of the Abu Dhabi Chamber, said that the private sector will be the main driver of economic growth in the emirate by 2030.
In 2014, the private sector accounted for 54 per cent (equivalent to Dh255 billion) of Abu Dhabi’s non-oil GDP, with the emirate aiming to raise the figure to 60 per cent by 2030, Al Muhairi said.
In order to raise such contribution from the private sector, the Abu Dhabi Chamber is working with companies in the sector to boost public-private partnerships. Al Muhairi said that private firms told the Chamber they were ready to fund government projects that would otherwise have been put on hold as a result of lower spending on the back of falling oil prices.
During the seminar, representatives from IHS also discussed global economic outlook, saying that the most likely path was continuing subpar growth over the next 3-5 years but not a recession.
“World economic growth slowed to 2.5 per cent in 2015… and we don’t expect more than a modest pickup in growth in 2016,” IHS said.
Such a slowdown is supported by various macroeconomic factors notably performance in China’s economy, which is expected to slow further because of the imbalance in credit, housing, and industrial markets, IHS said.
As well as reducing demand for oil and hence, impacting its prices, economic performance in China presents risks to emerging markets’ bourses as there are growing fears that the volatility in Chinese equities could infect other bourses.
IHS said that in order to counter such a challenging environment, Abu Dhabi needs to strengthen its private sector further through reforms that include easier access to funding and changes to the bankruptcy law.
