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Tue 10 Aug 2010 01:11 PM

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Abu Dhabi nominal GDP falls 18% in 2009

Abu Dhabi's nominal gross domestic product falls to AED546.476bn ($148.8bn) last year.

Abu Dhabi nominal GDP falls 18% in 2009
ABU DHABI: Abu Dhabi accounts for more than 60 percent of the GDP of the United Arab Emirates.(Getty Images)

Abu Dhabi's economy shrank 18 percent in nominal terms in 2009, data showed on Tuesday, but analysts attributed much of the drop to lower oil prices and said real activity may not have shrunk that much.

Nominal gross domestic product fell to $148.8 billion last year in the wealthiest of the seven emirates, from $181.51 billion in 2008, according to preliminary data published on Tuesday in the Abu Dhabi Statistics Centre's yearbook.

Economic data in the Gulf tends to be released later and in less detail than in developed economies. Abu Dhabi inflation was 0.8 percent in 2009, but the office has not yet finished the calculations needed to estimate the real trend in economic activity after accounting for price changes.

Peter Crossman, assistant director general at the statistics office, told a news conference: "Most of the apparent decline is due to ... price effects".

He said: "If you look at performance of say the labour market, people employed, there has not been, I believe, recession of any sort (in real terms)".

The statistics office did not give GDP in real terms, but has said it plans to start releasing real GDP figures in the first half of next year.

Some analysts said the Gulf emirate, which accounts for 10 percent of the world's oil reserves and more than 60 percent of the GDP of the UAE, probably managed moderate growth in real terms last year.

Marios Maratheftis, regional head of research for Standard Chartered said: "The oil production cut was smaller than the drop in prices and ... high government spending in key projects could have picked up some of the slack in the economy".

However, all the emirates were hit by the global downturn, while Dubai became mired in a debt crisis last year.

Charles Seville of Fitch credit rating agency said: "What you would expect is that there was an overall recession in Abu Dhabi last year, simply because oil production was cut by upwards of 10 percent".

Seville, a director in Fitch's sovereign group said: "The non-oil sector would have grown, but the construction sector would have slowed down and the financial sector was not lending".

The picture was further complicated by large revisions to Abu Dhabi's nominal GDP data for 2005, 2007 and 2008. The emirate's statistics office gave no immediate explanation.

Data on the UAE's National Bureau of Statistics website show Abu Dhabi's nominal GDP at $141.54 billion for 2008, almost $40.02 billion lower than the 2008 figure published in the Abu Dhabi yearbook on Tuesday.

Data in the yearbook for previous years also showed significant revisions.

Oil and natural gas activities comprised 49.4 percent of Abu Dhabi's GDP in 2009, down from 60.9 percent in the previous oil-boom year, the data showed.

Analysts say economic data from Gulf countries is patchy and backward looking, forcing them to look at other data, from oil production numbers to hotel occupancy rates, as a way of gauging these economies' economic health.

The overall economy of the UAE, the world's third largest crude exporter, grew 1.3 percent overall in real terms last year, preliminary estimates showed in May, although analysts had expected a contraction of 1.4 percent due to lower oil output, troubles in the real estate sector and sluggish credit growth.

The economy is expected to grow by 2.1 percent this year, the slowest pace among the Gulf Arab oil exporters.

Abu Dhabi, which accounts for some eight percent of the OPEC output, will be the key driver after debt restructuring weakened Dubai. (Reuters)

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