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Tue 4 Jun 2019 08:36 AM

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S&P sees Abu Dhabi GDP growth averaging 2.5% to 2022

S&P Global projects economic growth in Abu Dhabi to accelerate to 2% this year from 1.8% in 2018

S&P sees Abu Dhabi GDP growth averaging 2.5% to 2022

Abu Dhabi’s economic growth will average 2.5 percent in the four years through 2022 as it benefits from higher oil production and prices, S&P Global Ratings estimated.

Abu Dhabi’s economy still depends heavily on oil, deriving 50 percent of its real gross domestic product and more than 90 percent of central government revenue from the hydrocarbon sector, the ratings company said in a report May 31. Oil will continue to dominate the economy despite diversification efforts, it said.

S&P Global projects economic growth in the largest and richest of the seven emirates that make up the UAE to accelerate to 2 percent this year from 1.8 percent in 2018.

It expects growth to accelerate to 2.5 percent in 2020 and 2021 before climbing to 3 percent in 2022. S&P expects Brent will average $60 per barrel this year and next, before dropping to an average $55 a barrel in 2021.

Brent has climbed 20 percent this year to $64.49 a barrel.

The UAE’s central bank on May 29 provided a grim forecast for OPEC’s third-biggest producer, projecting economic growth will fall far short of previous estimates and undershoot the International Monetary Fund’s projections.

The oil economy is set to grow 2.7 percent, a downward revision from 3.7 percent, according to the central bank. The non-oil economy will expand an estimated 1.8 percent, versus an earlier forecast for 3.4 percent, it said.

The ratings company also affirmed its AA credit rating for Abu Dhabi, with a stable outlook underpinned by the emirate’s large fiscal buffers projects the Abu Dhabi Investment Authority’s assets will average above 250 percent of GDP over 2019-2022.