Official says gov't will continue to spend to support long-term growth target of 6%
Abu Dhabi's economy is expected to expand by up to five percent next year, not far from the long-term target rate of 6 percent annually, and the government will continue spending to support growth, a government official said on Monday.
The UAE member, which sits on 10 percent of global oil reserves and accounts for 90 percent of UAE oil output, felt the pinch of the global financial crisis in 2009 after crude prices tumbled from 2008 record highs.
With an oil price recovery in 2010, the economy, which depends on oil production for 57 percent of gross domestic product, picked up speed again.
"For this year, the real growth will be about 4.5 percent. Next year, I will assume it will be the same level - 4.5, 5 percent," Mohamed Omar Abdulla, Undersecretary at Abu Dhabi's Department of Economic Development, told Reuters on the sidelines of an economic forum in the UAE capital.
Abdulla said growth was being helped by efforts to diversify Abu Dhabi's economy and that sectors other than oil were now accounting for about 50 percent of growth in the emirate.
A Reuters poll last month predicted the UAE as a whole would expand 3.8 percent this year and at the same rate next year. The 2012 forecast was cut from 4.0 percent predicted three months earlier because of worsening global conditions.
Abu Dhabi has run a budget deficit for the past two years, partly due to a doubling of spending on development in 2009 and after its $10bn bailout of fellow emirate Dubai after a property bubble burst in 2008.
But Abdulla, while declining to give specifics, said the emirate would continue spending actively on education, health and infrastructure.
He said some spending plans were being adjusted "in response to the circumstances around us", but that "the strategy will be the same, to support growth".
"The spending ... will continue in general. The government of Abu Dhabi will continue to spend as usual on the economy and of course we have many plans in terms of infrastructure."
Abu Dhabi spent AED245.5bn ($66.8bn) last year, 6 percent less than in 2009, government data shows. The emirate, which accounts for some 71 percent of UAE fiscal spending, did not publish its 2011 budget plan.
Its budget deficit more than halved to AED57.1bn, or 9.2 percent of GDP, in 2010.