Abu Dhabi’s economy expanded by 11.2 per cent in the first six months of this year on an annual basis, driven by a robust performance of the oil and non-oil sectors, despite mounting global macroeconomic challenges.
The size of the emirate's real gross domestic product at constant prices surpassed Dh543 billion ($147.9 billion) at the end of the six-month period, the Abu Dhabi Media Office said on Thursday as it cited the latest government data released by the Statistics Centre – Abu Dhabi (SCAD).
The value of non-oil GDP grew by Dh28.4 billion to Dh273 billion at the end of the first half of 2022.
Abu Dhabi's economy expanded 11.7 per cent on an annual basis in the second quarter of this year, hitting the highest three-month value in six years, the centre said without giving further details.
“Positive growth rates in Abu Dhabi reflect the profound strength and success of the economic diversification policy, which contributed to the economy's resilience and ability to address global changes posed by geopolitical and economic factors that directly affected strategic sectors such as energy and international trade,” said Mohamed Al Shorafa, chairman of the Abu Dhabi Department of Economic Development.
The emirate continues to reap the benefits of policies that have strengthened the “pillars and foundations of the economy” and helped it to maintain “competitive performance while attracting investments with more initiatives to achieve the strategic objectives”, he said.
Abu Dhabi’s economy, which made a strong rebound last year from the coronavirus-induced slowdown, has gained further momentum this year.
In May, S&P forecast that Abu Dhabi's real GDP growth would accelerate to more than 5 per cent in 2022, with real GDP reaching 2019 levels in 2023.
However, Mr Al Shorafa said earlier this month that the emirate’s economy was set to grow at par with the UAE economy this year.
The UAE Central Bank expects the country’s economy to grow 5.4 per cent this year.
The International Monetary Fund has projected a 6 per cent economic expansion, driven by a rebound in tourism, construction and activity related to Expo 2020 Dubai.
Emirates NBD recently raised its growth forecast for the UAE economy to 7 per cent in 2022 while Abu Dhabi Commercial Bank has projected growth of 6.5 per cent.
According to the latest SCAD data, the oil sector, including mining and quarrying activities, accounted for 49.7 per cent of Abu Dhabi’s GDP during the first half of 2022.
Non-oil sector activities contributed 50.3 per cent, despite a sharp rise in global oil prices that contributed to the emirate’s oil revenue during the period.
“The increase in the non-oil sector's contribution to the real GDP proves the success of the ambitious strategic plans for diversifying the economic base in Abu Dhabi,” SCAD said.
Positive growth rates in Abu Dhabi reflect the profound strength and success of the economic diversification policy, which contributed to the economy's resilience and ability to address global changes
Mohamed Al Shorafa,
chairman of Added
The manufacturing sector, which accounted for 8.1 per cent of Abu Dhabi's GDP, grew more than 10 per cent on an annual basis during the first half.
The construction and building sector contributed 7.7 per cent, followed by wholesale and retail sector activity, which accounted for 5.9 per cent of GDP.
Meanwhile, financial sector activities contributed 5.5 per cent to the emirate's economy in the first half of this year, growing 9.1 per cent on an annual basis during the period, according to SCAD data.
The “remarkable growth rates in the non-oil sectors” during the first half of 2022 reflect a “competitive outlook of Abu Dhabi's business ecosystem”, said Added Undersecretary Rashed Al Balooshi.
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Countries recognising Palestine
France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra
