Growth in non-oil sectors expands Abu Dhabi GDP

Abu Dhabi's macro economy saw robust performance in Q1 of 2016, reflecting continuous good growth rates at the end of 2015.

Latest estimates issued by SCAD indicate that the GDP of Abu Dhabi, at the fixed prices, reached Dh196.1 billion in Q4 of 2015 with a growth rate of 7.7 per cent, compared to the same period in 2014.

These results appeared in Abu Dhabi's Economic Performance Report in Q1 of 2016 as per Abu Dhabi's sectoral and macro indicators. The report is issued by the Abu Dhabi Department of Economic Development's (Added) Studies Directorate.

Ali Majid Al Mansouri, Added Chairman, stressed that Abu Dhabi's local economy witnessed strong growth momentum in non-oil sectors in Q4 of 2015.

Sectoral data indicated that the performance of some economic sectors in Abu Dhabi improved in Q1 of 2016, especially in the financial market, the tourism sector and non-oil foreign trade, as reflected by data issued by the Abu Dhabi Tourism Authority, Abu Dhabi Securities Market, and SCAD.

He pointed out that non-oil sectors enhanced economic growth in Abu Dhabi in Q4 of 2015, when non-oil GDP growth rate, at fixed prices, reached 8.8 per cent compared to an oil GDP growth rate of 7.1 per cent.

Contribution of Non-Oil Activities Increases by 0.5%

The chairman pointed out that the relative contribution of non-oil activities to Abu Dhabi's GDP increased to 50.7 per cent in Q4 of 2015, compared to roughly 50.2 per cent in Q4 2014, as per the estimates of SCAD. The good performance of non-oil sectors in Abu Dhabi demonstrated the positive impact of efforts to transform the fluctuations in world oil prices into an opportunity, with the objective of promoting economic diversity by enhancing non-oil activities.

"The performance of non-oil sectors reflects the flexibility and capabilities of Abu Dhabi's economy, as it has the essential economic foundations in terms of a solid financial situation, competitive business environment, attractive investment climate and social stability. Furthermore, it reflects its flexibility to accommodate challenges related to unfavourable developments in the international economy, transforming these challenges into opportunities to move forward towards more diversified economy and achieve the goals of the Abu Dhabi Economic Vision 2030," he concluded.

Khalifa bin Salem Al Mansoori, Added Acting Under-Secretary, said that the overall reading of the results of development indexes in Q1 of 2016 reflects continuous optimism and confidence amongst consumers and within the business community over the economic conditions in the emirate. This follows the growth momentum witnessed by the economy in Q4 of 2015. Meanwhile, Abu Dhabi and the UAE's efforts continue to contain the economic impact of international economic developments, especially the continuous fluctuations in oil markets.

He said that the General Index for Consumer Confidence has shown continuous optimism among consumers in Abu Dhabi across demographic and social levels in Q1 of 2016, as they have better expectations of the economic conditions and their future financial conditions.

Persistent Optimism

The Acting Under-Secretary said that in the business sector, the General Index of Confidence in the Business Climate and its sub-indeces have shown persistent optimism amongst economic establishments of various activities, sectors and sizes in Q1 of 2016, in spite of the fact that that the performance of the general indicator in 2016 was relatively affected by the decline of establishments’ evaluation of their own internal conditions and sectors in Q4 2015, compared to the same period the previous year, which in turn affected establishments' optimism levels.

Regarding the results of the National Family Status Observatory, and according to the goods prices indicator, the Chairman of Added said that these results showed that prices are seen to be high by less numbers/groups of UAE national families in Q1 of 2016. Moreover, the consumption pattern of most national families of food commodities did not witness any change, despite their feeling of price increases in Q1 of 2016. The results also showed a decline in the percentage of borrowers from national family heads to the minimum levels, thanks to the initiatives and efforts of rationalising citizens' consumption and borrowing behavior.

Sectoral Performance

As for Abu Dhabi's sectoral performance indicators in Q1 of 2016, the latest data issued by Abu Dhabi Tourism and Culture Authority showed enhanced performance of the tourism sector in Q1 of 2016. The number of hotel guests increased by about 11 per cent, compared to the same period in 2015, to approximately 1,115,547 guests. The number of hotel nights increased by about 10 per cent to approximately 3,147,754 nights.

Occupancy rate in hotel facilities was about 79 per cent, a decrease of 4 per cent compared with the same period in 2015. However, the total revenues of hotel facilities went down by 6 per cent to Dh1,719 million in Q1 of 2016 compared to Dh1,820 during the same period in 2015. By nationalities, guests from within the UAE recorded growth rate of 11 per cent in Q1 of 2016, coming fifth after guests from Jordan, Egypt, India and the Philippines. UAE guests accounted for 32 per cent of the total guests in Q1 of 2016. Indian guests came second with 7 per cent.

In the real estate sector, the Jones Lang LaSalle annual report, which monitors real estate performance in Abu Dhabi, marks stability in housing unit rental rates in Q1 of 2016, despite the continuous decline in oil prices. Real estate market data indicates that available real estate units decreased due to lower demand. Consequently, rental rates were stable and market data reflected a decline in real estate trading volume for housing units in Q1 of 2016 owing to lower optimism levels amongst investors as a result of lower oil prices.

As for Abu Dhabi’s non-oil foreign trade in Q1 of 2016, the report highlighted that the total value of Abu Dhabi’s non-oil foreign trade in goods in January - February 2016 has grown to Dh30.8 billion, about 7.7 per cent growth rate compared to the same period in 2015. This was the result of a higher rate of non-oil exports by 69.7 per cent to Dh9.8 billion, while the value of imports and re-exports decreased -9.1 per cent and about -0.5 per cent, respectively. 

The considerable increase of non-oil exports during January - February 2016, compared to the same period in 2015, was due to the emirate’s higher volume of exports in terms of consumer goods (food and beverage), by 316.4 per cent, and transport equipment and its parts by 310.3 per cent.

According to SCAD’s released data, most of the emirate’s non-oil exports went up in January - February 2016 compared to the same period in 2015, except for fuel and lubricating oils products, which slightly decreased (-18.8 per cent).

As for the developments in the emirate’s financial market in the first quarter of the current year, the Economic Performance Report showed an improvement in closure indexes of Abu Dhabi Securities Exchange during Q1 of 2016, compared to Q4 of 2015. The ADX General Index increased by 1.9 per cent as it closed transactions at 4,390.42 points at the end of Q1 of 2016, compared to 4,307.26 points at the end of Q4 of 2015.

A few indices have surged, including the energy sector by (2.41 per cent), the real estate sector by (19.41 per cent) and the telecommunication sector by (14.91 per cent). Other indices have dropped, including the banking sector, (-5.51 per cent), the consumer goods sector (-0.01 per cent), the industrial sector (-1.98 per cent), the investment and financial services sector (-2.04 per cent), and the insurance sector (-2.09 per cent). The market has seen a rise in foreign investors' purchases who acquired 57.10 per cent of the total number of purchase transactions during Q1 of 2016 compared to 53.33 per cent in Q4 of 2015.

According to the report, the stability in oil prices above $30 per barrel contributed to improving the ADX indices. The price of Abu Dhabi Murban crude increased in February 2016 to $33.00 per barrel compared to $30.0 per barrel in January.

Going by sectoral indicators, the real estate sector comes first in terms of high index value in Q1 of 2016 when compared to Q4 of 2015. Trading volume surged by 191.8 per cent from 1,756,324,237 shares in Q4 of 2015 to 5,124,215,197 shares in Q1 of 2016. The trade value increased by 107.4 per cent, from Dh2.4 billion in Q4 of 2015 to Dh4.9 billion in Q1 of 2016.

These numbers indicate the rise of traded shares of real estate companies in Q1 of 2016, which reached 57 per cent of the total market trades compared to 37.45 per cent in Q4 of 2015. The percentage of trading value increased 32.86 per cent in Q1 of 2016 compared to only 15.49 per cent in Q4 of 2015.

Trading in the energy sector has surged by 47.54 per cent, from 1,372,046,323 shares in Q4 of 2015 to 2,024,346,198 shares in Q1 of 2016. Accordingly, the oil sector ranks second in terms of its contribution to the overall amount of trading in traded shares during Q1 of 2016 which reached 22.52 per cent compared to 29.25 per cent in Q4 of 2015.

Most of the sectors have seen a decline in terms of closure index values at the end of March 2016 compared to the end of December 2015. However, most of these sectors have recorded high rates of market trading in Q1 of 2016 compared to the last quarter of 2015, including the sectors of banking, industry, investment and financial service, and insurance.

Emiratis own 82.2% shares listed on ADX

In the Emirate of Abu Dhabi, UAE nationals own the majority of shares, amounting to 82.2 per cent at the end of March 2016, leaving only 17.8 per cent to foreign investors.

The services sector comes first in terms of UAE nationals’ ownership of its shares, accounting for 97.7 per cent. The insurance sector comes second with 95.2 per cent and the consumer goods sector comes third with 88.9 per cent for locals. Released data have shown that expatriates are interested in investing in the shares of electronic fund, debt instruments, energy, and real estate at the rates of 46.6 per cent, 32.6 per cent, and 25.7 per cent respectively.

According to ADX data, the majority of shares purchasing and selling transactions were made by UAE national, accounting for 50.2 per cent and 42.9 per cent respectively while expats’ transactions reached 49.8 per cent and 57.1 per cent respectively.

Individuals have had the lion’s share in trading volume in Q1 of 2016, with 8,425,295,355 shares purchased or 77 per cent of the total purchase volume. They also accounted for the 79.9 per cent majority of the selling volume or 8,745,273,300 shares sold. The remaining percentages were corporate trades accounting for 23 per cent, and 20.1 per cent respectively compared to 40.3 per cent and 27.6 per cent in Q4 of 2015. This can be a great challenge for the financial market if the total demand levels have generally continued to go down in the emirate.

As for the Q1 2016 inflation rates in the Emirate of Abu Dhabi, the CPI of Abu Dhabi has recorded 105.6 points on average during Q1 of the current year. According to the reports issued by SCAD, the annual inflation rate reached 3.2 per cent during the quarter, as expenditure groups contributed to high CPI values during Q1 of 2016.

Residence, water, electricity, gas and other kind of fuel greatly contributed to high CPI values, as its contribution rate reached 79.7 per cent as a result of the increase in their prices by 7.7 per cent. The relative weight of this group is 31.2 per cent of the total weight of main expenditure groups within the CPI market basket.

The Abu Dhabi Economic Performance Report for Q1 of 2016 indicated, according to Nielsen's Consumer Confidence Index, that the United Arab Emirates has been in advanced positions in terms of the levels of consumer confidence in economy during 2015. The UAE’s consumer confidence improved during Q4 of 2015, scoring 108 points compared to its level during Q3 of 2015 which scored 107 points. This reflects the country’s consumer confidence in economic conditions in the wake of the challenges faced by many global economies, particularly the economies of oil-exporting countries.

The Purchasing Manager Index, PMI, of non-oil private companies, issued by Markit in cooperation with Emirates NBD, scored 54.5 points in March 2016 after reaching 53.1 points in February 2016, reflecting an improvement in private sector performance. However, analysts point out that the PMI's average value during Q1 of 2016 reflects a slowdown in non-oil private companies’ activities, given the economic development at both internal and external levels.