Abu Dhabi said yesterday it would give priority to infrastructure in government spending for the next few years as part of its long-term development blueprint intended to achieve sustained growth in the oil-reliant economy.
Mohammed Omar Abdullah, Undersecretary of the Abu Dhabi Department of Economic Development, said the global financial crisis has prompted the emirate to rearrange its priorities, adding that a seven per cent growth target over the next two decades might not materialise.
Addressing the Abu Dhabi Economic Forum in the capital yesterday, Abdullah said the emirate would push ahead with stimulus programmes and that public spending would not be affected by volatile oil prices.
"I can tell you that government expenditure would continue unabated but I don't think there will be 30 per cent growth in spending this year as some reports say. It will grow this year but not as much as 30 per cent," he said.
"Regarding priorities, of course, they change by time… Our priority in public spending now is the infrastructure which we need to continuously develop and update because it is the main driver of economic sectors. Other priority sectors will be health and education, which are vital for a strong economy."
Asked whether Abu Dhabi would be able to attain its growth target of seven per cent through its long-term development strategy until 2030, Abdullah said growth could fall short of the target, but he played down such a development. He said that the main aim is to achieve viable growth which is not influenced by oil price fluctuations and which will eventually lead to stronger non-oil sector.
"When we talk about our economic vision, we are talking about a long journey stretching for 20 years from now.
"It is normal that this period will see some unexpected developments, which we should handle seriously to correct the path… now we have set a growth target of 6-7 per cent but that does not mean this level will continue through the next 20 years," he said.
"This march towards 2030 could face some unexpected developments and, therefore, we have to be prepared to deal with them. I think the ultimate goal is to maintain growth in the economy and ensure that this growth remains stable, effective and sustained based on a stronger private sector and expansion in the non-oil sector's contribution to gross domestic product."
Abdullah said Abu Dhabi, one of the largest oil exporters in the world, is working on what he described as a mechanism to deal with various developments in the coming two decades and achieve "good and stable growth rates".
"The seven per cent is not necessarily the targeted growth," he said.
"The main aim is to create a stable and viable economy in the emirate of Abu Dhabi. Growth could be below five or six per cent but it has to be stable and sustainable… As I said, we are dealing with a long-term economic vision not a short term plan."
Abu Dhabi has the largest economy in the UAE, accounting for around 52.7 per cent of the country's GDP in 2008, according to the Ministry of Economy. In nominal terms, the emirate's GDP leaped by around 29 per cent to Dh519 billion in 2008 from nearly Dh400bn in 2007.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.