Abu Dhabi GDP loses Dh120bn

The global fiscal distress sharply depressed Abu Dhabi’s economy in 2009 and the fall allied with an increase in the population to push down the emirate’s per capita income, official data showed on Wednesday.

The emirate’s economy, the largest in the UAE, lost around Dh120 billion and this allied with a surge in the population to depress its GDP per capita income by a staggering Dh96,000 in just one year, the Abu Dhabi Department of Economic Development (ADDED) said in its annual report.

From around Dh428,000 in 2008, the GDP per capita tumbled by nearly 22 per cent to nearly Dh332,000 in 2009, the report showed.

Despite the plunge, the emirate remained one of the richest nations in terms of GDP per capita and the wealthiest in the Arab region after Qatar.

“As the global crisis shadow crept over most of the economies and the countries of the world, the economy of the Emirate of Abu Dhabi has also been influenced by its consequences,” ADDED said in the second chapter of the report.

“The economic crisis prevented the emirate's economy from enjoying continued high economic growth rates witnessed over the past few years, as the implications of the crisis on global oil prices specifically affected the overall economic performance of Abu Dhabi.”

The figures showed Abu Dhabi’s nominal GDP slumped by around 18 per cent from nearly Dh666,732m in 2008 to about Dh546,476m in 2009.

The largest decline was recorded by the oil and gas sector, which shrank by 33.5 per cent in 2009 compared to a growth rate of 32 per cent in 2008.

“This contrast shows how the sharp drop in world oil prices impacted on the emirate's economy, as the average price went down by nearly 37 per cent from $97 per barrel in 2008 to $ 61 per barrel in 2009.”

But the report noted that the emirate’s non-oil GDP grew by around six per cent in 2009 albeit lower than in 2008, when it swelled by about 9.6 per cent.

“This reflects the vulnerability of non-oil activities to fluctuations in oil prices. However the volatility in growth rates of non-oil sectors was much lower than past years… this highlights the progress in policies of economic diversification, and stimulation of non-oil sectors,” the report said.

As for the components of GDP, 2009 witnessed a slowdown in growth rate of total commodity activities by 25 per cent compared to a positive growth of around 26.6 per cent in 2008, it said, adding that this shows the severe impact of the sharp decline in oil and gas sector which constitutes about 70 per cent of the total commodity activities in the emirate.

The report noted that some other sectors recorded higher growth rates last year, mainly manufacturing, and building and construction which achieved growth rates of four and five per cent respectively.

“On the other hand, the total service activities registered positive growth of seven per cent in 2009, but the overall performance remained lower than that of 2008, when it recorded a growth rate of about nine per cent,” it said.

“This could be a result of the retreat in the performance of the financial institutions, as well as the real estate and business services activities, which recorded growth rates of four and seven per cent respectively in 2009, compared to 11 and eight per cent respectively in 2008.”

According to ADDED, a steep decline in the volume of domestic demand witnessed in 2009 was the “final outcome” of the economic crisis.

“There was also a tangible change in the patterns of consumer spending for many of the population….this development has cast a shadow on the activity of wholesale and retail trade and repair services, which registered a growth rate of around six per cent in 2009 compared to 8.4 per cent in 2008.”

Turning to investment, the report showed the total gross fixed capital formation grew to around Dh79.8 billion last year from Dh72.6bn in 2008. But it noted that lower oil prices had negatively affected growth in such investments.

“It is essential to note the important role played by oil revenues, in increasing capital formation and in financing economic and social development projects. Given the very low oil prices over the past year, there was a significant decline in the growth of capital formation in 2009, which registered an increase of around 10 per cent, compared to 2008 and 2007 when growth rates reached nearly 18 per cent and 17.4 per cent respectively,” it said.

The report said lower oil prices and the decline in domestic demand, rents and food prices sharply depressed inflation in the emirate to just 0.8 per cent from a record annual high of about 15 per cent in 2008.

As for the population, it grew from around 1.572m at the end of 2008 to nearly 1.643m at the end of 2009, an increase of about 4.5 per cent. In 2009, males were estimated at 1.068m and females at 574,585.

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