HE Mohammed Omar Abdullah, Undersecretary of Abu Dhabi Department of Economic Development announced the results of the Abu Dhabi Economic Outlook Report, 2012-2016, at a press conference in the presence of a number of senior government officials and economists in the emirate.
His Excellency Mohammed Omar said that Abu Dhabi’s economy had entered a new phase of development, one emphasizing a further shift towards economic diversification, in line with the strategic objectives of Abu Dhabi Economic Vision 2030. The latter continues to take inspiration from His Highness Sheikh Khalifa bin Zayed Al Nahyan the President of the UAE, under whose wise leadership the Emirate of Abu Dhabi aspires to take its place among the world’s most advanced and developed economies.
His Excellency the Undersecretary noted the directives of His Highness Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and Chairman of the Executive Council of Abu Dhabi, to move forward with the development of the economy, and in ways that will achieve the sustainability of that development, thus ensuring the well-being and dignity of the people and residents of Abu Dhabi.
His Excellency Mohammed Omar referred to recent economic developments, both globally and regionally, noting that the UAE economy in general, and the Emirate of Abu Dhabi in particular, were not immune to such developments. He emphasized, however, the basic strength and durability of Abu Dhabi’s economy, and its underlying ability to overcome challenges.
He also stressed that recent periods provided clear evidence of the health of the emirate's economy, despite repercussions from the global financial crisis experienced since 2009. Many countries had seen slowing or negative economic growth, yet it was creditable that the Emirate had managed to achieve positive real growth during this period and in global terms had been amongst the least affected areas. His Excellency said the oil revenues of Abu Dhabi have allowed the emirate to complete and continue many strategic investment projects. International investors have been encouraged and convinced by the safety and stability of Abu Dhabi.
Furthermore, His Excellency made it known that ADDED has prepared various plans for a number of strategic economic sectors, including an overall industrial strategy designed to facilitate the achievement of the aims of Vision 2030. His Excellency drew attention to ADDED’s strategic plan for the development and promotion of exports, operating in conjunction with the activities of other relevant institutions in the sectors of tourism; transportation; energy; infrastructure; SMEs and in foreign and domestic direct investment.
Also present was HE Rashid Ali Al Zaabi, Acting Executive Director of Planning and Statistics at ADDED, who said the publication of the Outlook aimed to shed light on official expectations for economic performance in the emirate, taking into account the study of all development plans, and projects being executed or in planning.
He pointed out that the Report is based on current economic policies consistent with the goals and aspirations of Vision 2030, also taking account of the likely impact of regional and global economic realities, incorporating scientific and logical assumptions.
His Excellency Rashid said the importance of the report lay in its provision of the first definitive official economic forecasts at the emirate level, and of information and data relating to them. The in-house econometric model utilized, it was emphasized, is extremely rigorous from a quantitative perspective. Businesspeople and others should now be in a better position to make decisions, based on sensible perceptions of economic conditions likely to be experienced in Abu Dhabi.
The Studies Department of ADDED has prepared this report, after much consultation with a number of government departments and agencies involved in economic affairs in the emirate, and especially the Abu Dhabi Forecasting Committee, headed by ADDED. Members of the Committee include Statistics Centre - Abu Dhabi (SCAD), the Department of Finance, the General Secretariat of the Executive Council, the Abu Dhabi Council for Economic Development and the Abu Dhabi Urban Planning Council.
His Excellency Rashid said the forecasts were prepared taking into account proprietary business, consumer, and business cycle indicators, all of which incorporate the results of opinion polls conducted regularly during the year.
The Abu Dhabi Economic Outlook Report, 2012-2016, considers how the private sector is likely to be strengthened, for instance by the numerous projects signed-off earlier this year by the Executive Council. Such initiatives across the Emirate of Abu Dhabi will continue to stimulate domestic demand. The Outlook suggests Abu Dhabi real GDP growth of about 3.9% in 2012, and predicts that the economy will continue to grow in subsequent years, achieving an average annual growth rate in the range of 5.7% during the period 2013-2016.
The report forecasts Non-Oil real GDP growth of 5.5% in 2012, supported by the implementation of projects in the public and private sectors. Growth should continue, averaging 6.5% during the period 2013-2016, reflecting growing private sector investment and the completion of infrastructure serving free and other economic zones in the emirate.
Domestic household consumption in Abu Dhabi emirate is expected to grow by about 9.6% in real terms during 2012, and to average around 8.1% p.a. in the 2013-2016 timeframe, reflecting a buoyant economy and growth in per capita incomes.
Current ADDED projections indicate a high rate of capital investment growth in the current year, of about 11.3% in real terms, likely to be followed by growth of about 8.7% p.a. on average during the period 2013-2016. This reflects continued investor confidence in Abu Dhabi, including the ability of the emirate to overcome economic challenges. The forecasts are in line with the results of opinion polls on business confidence conducted in Abu Dhabi, and also reflect the considerable efforts made by government to create a more efficient business environment.
The Outlook report suggests the government will continue to support growth in the emirate during the period 2012-2016. It will further direct expenditures in line with Economic Vision 2030, favouring development projects with a social dimension, such as education, health, infrastructure and other projects contributing to the welfare of citizens and residents of the emirate.
The UAE is a globally recognized leader in the field of human development, taking first place in the Human Development Report in 2011 amongst Arab states for the second consecutive year, and was placed within the top 30 globally.
The Report highlights the ongoing effort on the part of Abu Dhabi’s government to promote the further development of a knowledge-based economy, and the importance of achieving economic diversification through the promotion of private investment in manufacturing industry.
The Report noted the directives of the Executive Council of the Emirate for new industrial cities to be established in Ruwais and Madinat Zayed. This confirms the government's keenness to achieve balanced regional development, for instance in the Western Region, where it is possible to assist the development of various industries in addition to oil and gas-related activities.
The Report forecasts an increasing contribution to GDP from the manufacturing sector. The focus on non-oil export growth and technological innovation has been paying off, and the outlook under these headings looks quite promising. Although off a low base in recent years, there is confidence that non-oil merchandise exports will continue to grow healthily, contributing to the success of new economic zones operational from this year onwards.
The Report refers to the initiative shown by the government in its approval of construction projects, including new industrial zones, a good example being Auto City. At the opposite end of the size spectrum the Executive Council continues to support the activities of the Khalifa Fund for Enterprise Development, which is concerned with identifying and assisting promising SME start-ups of varying sizes proposed by citizens.
There was further elaboration regarding the establishment of the two new industrialized cities, at Ruwais and at Madinad Zayed. The former relates to efforts to grow the chemicals and petrochemical sectors, oil and gas services, and the manufacture of cement and building materials; the latter targets oil and gas services, food-related industries, and logistics.
Aided by government support for the sector, the Report expects real GDP growth in the manufacturing sector of 5.2% during 2012, and acceleration to an average of about 7.1% p.a. during the period 2013-2016.
The construction sector was a major contributor to economic growth in the Emirate of Abu Dhabi during the period 2005-2010, growing at about 20.4% p.a. on average during that time. Construction is expected to continue its important supporting role in economic development in the Emirate during the current year, and is estimated to grow by 5.5% in real terms. The ADDED team estimates growth of about 6.2% in the sector during the forecast period.
Turning to the tourism sector, the report said growth was at a record in 2011, and good growth is expected in the future, forecast to be 7.5% in real terms during the period 2012-2016. The Report emphasized the importance of this sector in the promotion of economic growth and as a contributor to economic diversification in the emirate, and as such it is considered to be one of the key enablers of Abu Dhabi Vision 2030.
Also of great importance to the Government of Abu Dhabi is the continued development of the service sector. Within this, the health care sector is seen as a particularly important generator of economic growth in Abu Dhabi, and has a special place in Vision 2030. In order to underline the sector’s importance in the Vision the Executive Council had earlier this year signed-off the establishment of fourteen new health projects, designed to improve the level of provision across the emirate.
In a similar way the Report gives the education sector special priority in the emirate, in line with the guidelines set out in Vision 2030. The education sector is a key element in driving greater human development, and is consistent with the transition towards a knowledge-based economy.
Social services, including health care and education, is expected to grow at an average rate of 7.1% in the forecast period. His Excellency Rashid said ADDED has put much effort into expanding its economic database, and has increasingly made this information available to the business community to promote transparency and growth in the emirate.
Shorooq Al Zaabi, Head of Development Indicators and Future Studies at ADDED, pointed out that Abu Dhabi is very much part of the global economy within which it interacts; it is dynamic, and can experience quite rapid changes resulting from external stimuli. She emphasized the importance placed by ADDED on the gathering of more and better data, facilitating improved modeling and a clearer view of Abu Dhabi's economic outlook. Investors and businesspeople can be assured that ADDED's economic analyses are produced using scientific methodologies and realistic assumptions. Furthermore, Ms. Shorooq said ADDED had built a selection of specialized economic models. Firstly, there is a macro-econometric model for short-to-medium term forecasts; it is the main source for economic outlook reports, in addition to being used for policy analysis and factor testing. Secondly, there is a general equilibrium model, used in strategic planning. Lastly, there is a human resources development model, analyzing numerous aspects of the labour market in the emirate.
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