Adia assets still quite substantial
The Saudi American Bank (Samba) Group said such assets and the UAE's strong fiscal situation put the Gulf country in a better position than many other nations to face an expected economic downturn this year.
In its January economic bulletin, Samba said it had sharply revised down its forecasts for the UAE economic performance in 2009 as growth could dip below one per cent due to a steep cut in its crude output.
It estimated that the UAE's oil production could plunge by 12 per cent to 2.2 million barrels per day from January, a decline of nearly 300,000 bpd over its 2008 output of more than 2.5 million bpd. The report noted that the reduction, in line with an Opec deal to prop up sagging crude prices, would ally with the price collapse to create strong downward pressure on real growth in the UAE and sharply depress its crude export income.
"Despite this, we are still projecting a surplus both on the current account balance and consolidated fiscal accounts [comprising the federal government and individual emirates] in the region of four to five per cent of GDP," Samba said.
"More generally the UAE as a whole is better placed than most to weather the current downturn. Estimated oil break-even prices for UAE's fiscal accounts are the lowest in the GCC, and it has also built up huge savings, most particularly though increasing assets held by Adia," it added.
"While these assets are likely to have suffered losses as markets slumped, they are likely to remain very large."
Follow Emirates 24|7 on Google News.