Gradual rise in oil prices in the last few years is having a positive impact on Abu Dhabi’s economy. Image Credit: Gulf News Archives

Abu Dhabi: Abu Dhabi’s overall GDP (gross domestic product) in 2019 is expected to grow by 3 per cent at constant prices with non-oil growth projected at 3.9 per cent, a top official of Abu Dhabi’s Department of Economic Development told Gulf News.

“Abu Dhabi’s economy showed further improvement by the end of 2018, growth has strengthened somewhat as a result of policies taken by the government to boost economic growth. Our forecasting show that this improvement will continue in 2019,” said Rashed Abdul Karim Al Beloushi, undersecretary of the Abu Dhabi Department of Economic Development.

Different sectors, including manufacturing, tourism, transportation and storage, information and communication, finance and insurance, and media, is expected to perform well to boost the economy.

In 2020, non-oil activities will continue to improve with growth projected at 4.1 per cent driven by faster growth in manufacturing (4 per cent), transportation and storage, information and communication (7.4 per cent), accommodation and food services activities (7.4 per cent), financial and insurance activities (4.5 per cent).

“The fast growth expected over the next few years will attract and enhance the growth of foreign direct investment over all economic activities, open up the growth of non-oil trade exports and increase the contribution of private sector to the economic growth.”

The comments come as the government takes new measures to diversify the economy away from oil and boost non-oil growth with heavy investments in different sectors, including infrastructure, tourism and industries.

In early June 2018, the Abu Dhabi government announced a stimulus package of Dh50 billion for the next three years to encourage foreign investment and improve the business environment.

Recently announced measures include offering permanent residency to select expatriates, allowing 100 per cent foreign ownership in certain sectors like real estate, and reducing the costs of business licenses.

Abu Dhabi currently derives 50 per cent of its real GDP and more than 90 per cent of central government revenue from the hydrocarbon sector, including oil taxes and royalties and dividends from Adnoc.

Gradual rise in oil prices in the last few years is also having a positive impact on Abu Dhabi’s economy, Al Beloushi added.

Brent prices are currently trading at $61 per barrel and touched more than $70 per barrel in April following the reimposition of sanctions by Donald Trump administration on Iran.

S&P Global Ratings in a recent report also said Abu Dhabi’s real GDP could push its way back to higher growth on increased oil production and a revival in investments. The ratings agency projected an average growth rate of 2.5 per cent through 2019-22.