By Andy Sambidge
Rating agency also estimates GDP per capita at $110k, one of the world's highest
Abu Dhabi has had its AA/A-1+ long- and short-term sovereign credit ratings affirmed by Standard & Poor's, which said it expects the emirate to see about five percent GDP growth this year.
The rating agency also estimated that GDP per capita for 2012 would be $110,000, making Abu Dhabi one of the wealthiest economies in the world.
Real economic growth accelerated to 6.8 percent in 2011, bolstered by strong performance in the oil sector and this is set to slow to five percent this year, S&P said.
The agency said economic diversification efforts and government public spending have helped sustain non-oil economic growth at four percent, boosted by activity in the financial sector, manufacturing, and transport.
"We expect real GDP growth in 2012 to be around five percent, premised on 6.4 percent growth in oil output, together with a four percent growth in non-oil sectors," it added in a statement.
Assuming an oil export price of $112 per barrel this year, S&P said it estimates Abu Dhabi's fiscal surplus at 15.4 percent of GDP, up from 13.4 percent in 2011.
The agency added that the emirate will see revenue growth of 57 percent which will accommodate a 25 percent increase in expenditures, including hikes in development spending, ongoing financial support to government-related entities (GREs), and assistance grants.
Government spending in Abu Dhabi rose by an annualised 19 percent in 2008-2011 in response to the global credit crisis, and to meet higher social and public infrastructure needs in Abu Dhabi and the northern emirates.
Abu Dhabi expects spending in nominal terms to slow this year and be below the amount budgeted for 2012.
"In 2013-2015 and assuming that oil prices remain around $100 per barrel, we expect the fiscal surplus to average 10 percent of GDP, helping to further build the emirate's net external asset position," S&P said.
S&P also said the government's substantial net asset position, which it estimates at 191 percent of GDP in 2012, would provide it with a "comfortable buffer to meet contingent liabilities that may arise, particularly from GREs".
In affirming Abu Dhabi's ratings, S&P also said the emirate's outlook was stable.
The agency said the ratings were constrained by its view that the emirate "has weak political institutions, a lack of transparency and public accountability, and limited availability of timely financial and economic data, particularly regarding government assets".
It added that the ratings could come under pressure if there was a "sharp and sustained decline in oil prices" or if there were a prolonged depletion in the government's asset position.