Higher oil production and diversification to pay dividends
Abu Dhabi GDP to grow 2.9 per cent in 2018, says BMI
Abu Dhabi’s economy will reap the benefit in 2018 of ongoing diversification efforts and positive oil production growth, according to new forecasts from BMI Research.
The emirate’s economy is forecast to grow 2.9 per cent next year, as oil production increases following the expiry of a production cut by major producers, and “significant positive signs in the non-oil economy,” according to BMI, a unit of Fitch Group.
These signs include increased expenditure on infrastructure projects designed to capitalise on Dubai’s hosting of Expo2020, an increase in non-oil industrial spending, and increased foreign direct investment.
“As Abu Dhabi's oil production begins to expand once more in 2018, we forecast a pick-up in growth to 2.9%, as both the oil and non-oil economies will be performing more strongly,” said BMI in a report published on Thursday.
But the emirate’s growth will come under pressure in 2017 on the back of oil production cuts, in spite of heavy investments into new industries, BMI said.
An agreement signed by Opec and non-Opec producers in November, subsequently extended to March of next year, has shored up oil prices, but has resulted in lower oil revenues for Abu Dhabi, which has proven oil reserves of 92 billion barrels.
“Accounting for around half of Abu Dhabi's GDP, the oil sector remains the primary determinant of economic expansion in the emirate,” said BMI in a report issued on Thursday.
“As such, we forecast real GDP growth of 1.8% this year, compared to an expansion of 2.8% last year. This marks a downward revision from our previous forecast of 2.6%.”