Growth warning over turmoil in markets
ABU DHABI // Global market volatility and a sharp drop in the price of oil may challenge Abu Dhabi's long-term economic growth plans, a leading government official has warned.
The capital has been aiming to boost the growth in non-oil sectors of the economy by up to 10 per cent a year so that they contribute 64 per cent of GDP by the end of 2030.
"If we are able to maintain this growth, that will be great," said Mohamed Omar Abdullah, undersecretary at the Department of Economic Development. "But with changes in the market, changes in the oil price, this period may represent a challenge for our vision."
The price of crude for September delivery closed on Friday at a little more than US$82 on New York's Mercantile Exchange. The decline capped a fourth week of price drops that have pushed the price of crude down 10 per cent this year. In Europe, Brent crude ended the week at just more than $109, down from a high this year of about $127.
Investor confidence has been sinking in the region and elsewhere in the world.
Saudi Arabia's Tadawul All Share Index dropped 2.6 per cent during intra-day trading yesterday, the sharpest decline in nearly two weeks, and closed at 5931.29, down 156.97 points, or 2.58 per cent. All 15 industry sectors on the exchange retreated on reports that the global economic recovery is faltering.
Many investors continue to be concerned about a lack of decisive action on debt by officials in the US and Europe.
Investors in Saudi Arabia and the rest of the Gulf will be closely watching the US this week as new economic data is released.
In the US, the S&P 500 Index has declined more than 13 per cent this month, and other leading American stock indices have fallen for four consecutive weeks.
Some experts have warned the uncertainly will continue. “We’re not even close to the end of volatility,” said Mike Gibbs, chief market strategist at Morgan Keegan in Memphis.
It remains to be seen how severe another downturn may be in this part of the world, and to what extent any changes might affect targets in the Abu Dhabi Economic Vision 2030.
“For the short period we’ll notice this volatility,” Mr Abdullah said. “However, for the long term I hope it will be more stable.”
The Government says it will be keeping a close eye on market and oil price fluctuations as it determines how to move forward.
“There is a lot of analysis,” Mr Abdullah said. “We have to think how we respond to this.”
* With additional reporting by April Yee
Published: August 21, 2011 04:00 AM