The Abu Dhabi Government has produced a blueprint for the future of the economy, with sweeping measures aimed at diversifying the economy away from oil, ensuring transparency and opening up new avenues for foreign investment. The programmes are set out in Abu Dhabi Economic Vision 2030, a report developed by the Abu Dhabi Council for Economic Development in collaboration with the Department of Planning and Economy and the General Secretariat of the Executive Council. The report forecasts that the Abu Dhabi economy will grow at seven per cent a year for the next six years and then by six per cent, defying gloom and recession in the rest of the world. Gross domestic product will increase more than five times over the next 21 years, with boosts for foreign investment levels and the introduction of a statistical base for measuring the country's economic performance. The forecasts appear bullish at a time of global financial turmoil, and it is understood the Government accepts that there will be peaks and troughs during the period in question. However, it feels confident that even allowing for these fluctuations, the predicted average growth will be achieved. A note of caution has been sounded by economists who suggest there is a chance of a recession in the UAE. "Key sectors will be affected by the global downturn, such as tourism and the financial industry, along with a correction in the property sector and job losses," said Monica Malik, from EFG-Hermes. Marios Maratheftis, at Standard Chartered, agreed the risk could not be ignored, with the first half of 2009 likely to be "more difficult than the second". The report seeks nevertheless to chart methods for nurturing Abu Dhabi's emerging economy: "The Abu Dhabi Economic Vision 2030 provides a clear road map for the ongoing evolution of the Abu Dhabi's economy," said Nasser al Suwaidi, the chairman of the Department of Planning and Economy. "The plan seeks to harness the emirate's assets and resources to ensure the local economy continues to grow sustainably while delivering significant benefits to the entire community." One of the key recommendations is that the economy needs to strengthen its core energy sector while diversifying into other areas. In addition, the Government wants to see the creation of more job opportunities, particularly for Emiratis. The country already has the highest proportion of female workers in the GCC, but it wants this to increase. "The young national population is one of the emirate's greatest advantages, ensuring a wealth of human capital to meet the challenges of the future," says the report. There is also good news for skilled expatriate workers. "The emirate must take steps to attract and retain more highly skilled expatriate workers in order to move up the value chain," it says. For comparison, the economic performance of countries as diverse as Ireland, Norway, Singapore and New Zealand were used as a benchmark. "It's valuable to have a long-term plan that lays out a clear path for economic growth, but which is also flexible," says Simon Williams, the chief economist for the Middle East at HSBC Bank. "Nobody expects growth to be exactly six or seven per cent a year - it's an indicative figure for the pace of growth they think is achievable and sustainable." The report says the Government will seek to encourage non-oil growth at a faster rate than that of the oil sector. The aim is for the non-oil section of the economy to reach 50 per cent of the total by 2028. In addition, unemployment will be reduced among the national population to five per cent "effectively achieving full employment". Plans to diversify the economy and introduce the private sector are ambitious, given that Abu Dhabi is one of the most oil-dependent economies in the GCC.
Employment is also highly concentrated in certain sectors, with construction and government services accounting for more than half of all jobs. In addition, the report admits that while productivity has grown in the oil industry over the past decade, it has declined in the non-oil sector. The report also stresses the importance of adopting disciplined fiscal policies that are responsive to economic cycles. This may lead to the Government dipping into its reserves to keep the budget balanced. "While oil prices are high, fiscal revenues remain buoyant, but when the oil price dips, the fiscal balance falls into deficit, requiring injections from ADIA [Abu Dhabi Investment Authority] to maintain the zero-deficit policy followed since 1993," it states. The next phase will be the development of a five-year economic strategy and a 12-month action plan, which will provide a framework for the implementation of the Economic Vision 2030. "The publication of the Abu Dhabi Economic Vision 2030 is a significant further milestone in the Government of Abu Dhabi's ongoing commitment to greater transparency and accountability," said Mohammed Ahmed al Bawardi, the secretary general of the Abu Dhabi Executive Council. "The document articulates a comprehensive vision for Abu Dhabi's economic development and explains the key policy initiatives that will be implemented by various entities of the Government in order to achieve it." email@example.com * with additional reporting by Bloomberg