Emirates Business 2417. Wednesday. March 31. 2010 61 News

dreds ofbillions ofdollars of investments. According to the IMP, the UAEheld an in­ternational investment posi- . tion (lIP) with net assets of $305 billion (Dhl.l trillion) of international assets in 2009 and the great majority of them are owned by Abu

. Dhabi entities. The ratio of lIP net assets

over UAE's GDP is 132 per cent, compared to 105 per cent for Singapore and 52per cent for Norway."

on the strong hydrocarbon· Abu Dhabi has traditional­

" Abu Dhabi's aim is to stimulate non-oil sectors rather than to reduce activity in the oil sector Isthmus Partners

serves. Based on current util­isation rates and no addition­al discoveries, Abu Dhabi's oil reserves will last for 150 years, said the report.

According to the IMP esti­mates, the UAE produced 2.62 million barrels of crude oil per day on average in HI 2008, 97 per cent of which was produced in Abu Dhabi.

As a result, oil exports gen­erate significant income for the emirate.

In 2008, export revenue from oil arid

• Emirate is blessed with 95 per cent of the UAE's oil reserves and 92 per cent of gas . It has the second-largest economy in the Gee

Abu Dhabi's oil reserves projectedtolast another 150 years,says areport

ABU DHABI Shuchita Kapur

Oil-rich Abu Dhabi is on a strong growth trajectory and the emiratewill remain in a strong economic position in the future, too; after having weathered the 'economic downturn considerably well.

The figures quoted in a new report by Isthmus Part­ners ~u Dhabi Investment Environment', shows that with 33per cent ofthe coun­try's population, the emirate gas was contributes around 60 per cent to the UAE's GDP and has a GDP per capita of 1.8 times the national average.

"Abu Dhabi has one of the highest GDP per capita in the world. Even on a standalone basis, Abu Dhabi would be the second-largest economy in the GCC after Saudi Ara- . bia,' said the authors of the .report stressing the econom­

. ic clout of the capital city. . The emirate is blessed

with 95 per cent ofthe UAEs proven oil reserves and 92 . per cent of UAE's gas re­

Dh376.9 billion, but in 2009 this figure was reduced to Dh208.5bi1 due to the drop in the price of oil and the global economic recession.

With good revenues com­ing from the hydrocarbons, Abu Dhabi is also trying to diversify its economy.

"The government has in­tensified the diversification efforts in recent years capital­ising on the 2000s oil boom and the increased.inflows of foreign investrnent.t'said the report, adding that the "emi­rate's strategy is to capitalise

sector and grow into other industrial sectors as well as tourism and aviation".

The emirate is also home to one of the :world's leading sovereign wealth funds, Abu Dhabi Investment Authority, which is a strategic interna­tional investor.

The report said: "Although official figures on assets under management are not forthcoming, it is.considered that the Abu Dhabi Invest­mentAuthority (Adia) and Abu · Dhabi Investment Council (Adic) hold hun­

ly invested a considerable amount of its oil revenues abroad and such internation­al investments provide a sig­nificant source of income to the Abu Dhabi Government and reduce the volatility of the emirate's GDP and de­pendence on oil prices , said the authors of the report.

Exports of oil and gas brought $102.7bn to the UAEin 2008 and a projected $56.8bn and $71.8bn in 2009 and 2010 respectively, ac­cording to the IMP, as quot­ed in the report. The year

2008, which was probably one of the best in terms of economic growth, saw the UAE's consolidated fiscal sur­plus reach a record high of Dh127bn due to strong oil and non-oil revenue, even though consolidated govern­ment expenditure increased to a record of Dh1?8bn, as per the data in the report.

"The UAE reported fiscal surpluses for four consecu­tive years from 2005-2008 (while previously it had sev­eral years of fiscal deficits due to low oil prices and a steady .

growth in public spending and infrastructure).

"Asmall fiscal deficit of0.3 per cent of GDP is predicted for 2009 due to lower oil prices and an expansionary fiscal policy by Abu Dhabi to counteract the economic slowdow n: The IMF fore­casts that the UAE willre­port a surplus in 2010."

Given the economic growth, Abu Dhabi's popula­tion has increased rapidly in recent years , . primarily through immigration of ex­patriates. "Resident popula­

• Populat ion by emirate,2005 census

Emirate Total Citizens Non- % Non-population Citizens Citizens

AbuDhabi , - -_ 1.399.1:.8~ 3?0, 227 1.049.207 - 75.0%-...Dubai ' - ·. i;3~1 .4~3 13Z573 .'1.183.@ 0 :- 8 9.6% -.Sharjar ··----793 -. 138:272 . ·655.36f" .- 82.'6%~573- r : _ . .. .;:- ___ ...:;,. _ _ .. =- -... <;. ' .lo": .r< , . . - '~

Ajman 206 ,997 39.2}1 .167,766 _ _ ~b9.!'~ .- .- ." ~.

Uir)m.ALQuw@jn.;" .; __~~iJ9, .• ~l5 ,873 :3.3:~8ELJ.'""::67.70/0

Rjls AI.Khaimah ,;". - 21Q.063 87;848~ -~lf·2",?1.5~~_ '§§2J~

Fujairah .• ·125.698 56.421 . . 69.277 _ .55.1%

1M WI ;see EiSa.

• GOPper capita of AbuDhabivs other countries (Rea/2005 $ '000) . Ranking

(out of 181)

Norway • - - - ~ -- - .:...J 64.0 2

3

5

7

19

21

Canada

UAE 23 Singapore .":" ';:'====::;i

I .'

-;~ 25 KSA - 13.4 37

Oman 8.5 47

o 10 20 30 40 50 60 70 80

• GOPbreakdown by economicsector (Real 2005, $)

28% 30%33% Other

· 9-% Financialservices 7% Constructionand utilities

• Government services

• Manufacturing

• Mining:quarrying andenergy

GCC ..AbuDhabi Norway Canada G7

Least Most diversified diversified

• Breakdown of Abu DhabiGOP, 2008F • Populationgrowth CAGR 1997-2007

Germany I0.1% .

UKlo.4%

US _ 1.0%

GCC

AbuDhabi

3.2%

5.0%

I I I I I o 2 3 4 5

Source: Isthmuspartner

OilandgasGovernment services

. Manufacturing -_.

Financial services -_.

Wednesday, March 31,2010 .Emirates Business 2417

tion grew by a compounded average of4.6 per cent annu­ally between ZOO1and Z006. Between 2005 and 2008, the emirate grew at a faster an­nual rate of six to seven per cent. Anecdotal evidence suggests that the population increased mildly in Z009 and Z010, as Abu Dhabi remains a net employer." _

In recent geve lopme~Fs ,

Abu Dhabi was also hit by the global credit crunch. . "The oil growth engine

(centred in Abu Dhabi) and the non-oil growth engine

(centred in Dubai) were hit at the same time driving the country into mild negative real GDP growth in 2009, forecast at -0.7 per cent by the IMF."

However, it was asofter landing. "Though at the be­ginning ofthe financial crisis many' participants expected that Abu Dhabi could be im­mune to shocks, the reality is that the crisis has affected Abu Dhabi thoughtoa small­er degree. _ ­. "In the real estate sector,

Abu Dhabi has expanded

more conservatively and has a better match of demand with supply. In many seg­ments of the property mar­ket, Abu.Dhabi is still under­supplied. Yet the UAE'scapi­tal experienced areduction in real estate prices in·Z009. Prices in prime residential properties have fallen 40 per cent between Q3 200S-and Q3 2009," said Colliers.

Rental levels have fallen by an average IS per cent in the first three months of Z009, but had previously increased by 1:1- per cent in Q4 200S.

"Occupancy rates in Abu Dhabi are almostIou per cent and supply of complet­ed property (rather than off­plan) cannotsatisfy demand. Yet rental prices have been dropping since Southern Dubai has emerged as a sub­stitute to Abu Dhabi."

As far as the banking sec­tor is concerned, the central government has moved proactively in easing the liq­uidity problem and restoring confidence ill the system.

Other sectors of Abu Dhabi'~ economy are per­forming well. The return of oil prices to the $70-$SO a barrel level has boosted oil revenues. "Industrial de­mand and revenues have fall­en due to the slowdown in global activity and local con­struction, but investments in this sector continue.

"Abu Dhabi will capitalise by increased industrial ex­port revenues once the glob­al economy resumes expan­sion . In the meanwhile, the emirate benefits from carry­ing out its infrastructure in­vestments at reduced cost due to the drop in the price of construction materials and labour costs."

Abu Dhabi has 'also indi­

cated that the government ' and the emirate will contin­ue supporting troubled gov- : ernrnent-related entities ' given that they are sustain- . able businesses, the report points out.

With a GDP of Dh5Z0bn in 200S, the emirate is a strong economy. Yet, Abu Dhabi isone ofthe most con­centrated economies in the GCe, as the oil sector domi­nates economic output and any major fluctuations in oil price can impact it .

Thus, diversification is in a major way and the emirate has invested large amounts of capital in broadening the economic base. .

"Abu Dhabi has intensified efforts embracing the two pillars of diversification and I privatisation.Tntroducing I strategic measures and un­dertaking substantial new in- \ vestments in industry, real estate, tourism, aviation and other-sectors .

"Abu Dhabi targets an an­nual growth of 7.5 per cent; The emirate published in 2009 the 'Abu Dhabi Eco­nomic Vision 2030' outlining its economic priorities for the coming years and its poli­cies over the next two decades to achieve its goals.

"The plan envisages a pop­ulation of 3.1 million by 2030, an SOper cent increase from an estimated 1.7million people in 2009," it said.

"Abu Dhabi's aim is to stimulate non-oil sectors rather than to reduce activi­ty in the oil sector. It is in­creasing its industrial base [petrochemicals, plastics, metals] capitalising on the availability of resources.

.In addition, it is looking to boost tourism and aviation sectors amongst others.

On sector analysis ofthe AbU Dhabi economy, the Abu Dhabi Investment

.Environment report highlights that Abu Dhabi aims to become the Middle East hub for in­dustrial aDd manufactur­ing companies seeking to

. capitalise on the numer­. ous opportunities that

the emerging economies of the region offer; .

"The government en­visages exploiting the

. emiratescompetitive.ad­vantage in the energy sec" tor and cqmmanda largo . er share of the hydrocar­bODS value chain.

''According to the Abu Dhabi Chamber ofCOme merce, in~estmeitisin in ­dustrial projects reached Dh39.8 Billion in 2008."

The construction sec­tor is another important one to.watch out for. It Cotltribute<fDh2tbn to Abu Dhabi's GDP in

2008. Construction activ­ity is still strong-as there are massive infrastruc­ture projects under devel­

-opment , Growth in real estate construction has slowed downbutfunda­mentals are good, said the.report. .

. "There are massive . government orgovern­merit-related investments in shipyard, seaport, air­port expansions, health­care, education, major­road upgrades and trans­portation. . ' ..

. "Infrastructure invest­ment makes upa sigllifi­

.cant'arid growing propor­tion ofconstruction ac­

' . tivity for Abu Dhabi and the GCe," it said. .

Developments in transport are also come mendable. Abu Dhabi's

. new port is under con­struction and will include one ofthe world's largest industrial zones. .

The emirate has also .ices in order to develop a undertaken a massive ex- military-aviation-mainte­pansion project for its~ mince centre," the report main airport~said.Abu Dhabi is alsoin- :

Aerospace arid defence vesting considerably in are also important pillars the tourismsector as a for Abu Dhabi's diversifi- means ofdiversification, cation plans. , T4e government has

"In the.third quarter of • undertaken big initiatives 2009., Mubadalaan­

. nounced that it had ' . . signed along-termstrate­gic aerospaceagreement with Boeing to develop .mutually beneficial illi­tiatives in various areas ' including composite ... . manufacturing, engineer­ing, R&D, commercial - . maintenance, repair and overhaul, military main­tenance and sustainment, arid pilottraining. ­

"Inthe first quarter of 2009, Mubadala had an­nounced that it isin the initial stages offorming a joint venture with the . United states company Sikorsky Aerospace Serv­

in tourisminfrastructure, .' '. including the airport ex~ .

~ pansion and iconic mas­ter developments, such as Sir Balli Ya~ Island (home to the Yas Marina.Circuit

'. already hostingthe Abu Dhabi Grand Prix) and . Saadiyat Island (home to the AbuDhabi Louvre and Abu Dhabi Guggen'­heim that Wi11 be com- . pleted in2012).

The cityhas been de­velopingspecialised eco­

.nomiczonesin strategic locations to attract in­vestments. :

The emirate has . launched huge projects to diversifyitseconomy,

~