The UAE’s oil export earnings could swell to an all time high of nearly $140 billion this year as crude prices are projected to rise to their highest average and the country’s oil output could hit a record high.
Forecasts by the Saudi American Bank Group (SAMBA) showed the UAE’s oil production grew by around nine per cent in 2011 and is projected to increase further by nearly four per cent to a record high level in 2012.
It said the UAE, a key OPEC member, is also expected to expand its natural gas liquid (NGL) output this year following a 45- per cent surge to nearly 800,000 barrels per day in 2011.
“With both average annual oil prices and UAE oil production likely to be at record levels in 2012, oil revenues are expected to soar,” it said in its quarterly report on the GCC economies.
“On our assumption that Brent averages $118 a barrel this year, total UAE hydrocarbon revenues could top $140 billion, helping push the current account surplus up to 11.6 percent of GDP.”
The report said higher oil revenues would also give the government more room for manoeuvre, allowing increased spending both through the various budgets and via government related entities and investment companies.
Aided by some retrenchment in Dubai and reduced support from Abu Dhabi to its GREs, the consolidated fiscal balance for the UAE as a whole is expected to recover strongly, surging to a surplus of 7.4 percent of GDP from an IMF estimate of 2.9 percent in 2011, despite increased spending on salaries and a resumption of investment spending in Abu Dhabi, it said.
“Large oil revenues will also feed through into a further accumulation of the UAE’s already massive external assets.”
SAMBA said no accurate data on assets held by UAE sovereign wealth funds is available but cited recent estimates by the Washington-based Institute for International Finance (IIF) showing the country’s foreign assets will rise by nearly $60 billion to $579 billion this year and to $630 billion by 2013.
Turning to economy, the report cited IMF data showing the UAE’s GDP, the second largest in the Arab world after Saudi Arabia, expanded by about 4.9 per cent in 2011 and is projected to grow 3.4 per cent in 2012.
Growth in 2011 was spurred mainly by the hydrocarbon sector, which swelled by nearly 9.4 per cent against 2.7 per cent for the non-oil sector.
The figures showed 2012 could see even growth in the two sectors, with around 3.6 per cent for hydrocarbons and 3.5 per cent for non-oil GDP.