The worst is behind us and growth will accelerate, says top Abu Dhabi economic official

Ali Majed Al Mansoori, chairman of the Department of Economic Development, expects growth of 5% in 2017.

Abu Dhabi's credit rating was maintained in May at Aa2 at Moody’s Investors Service, citing 'very large fiscal buffers'. Silvia Razgova / The National

Abu Dhabi’s economic growth will accelerate next year as emirate seeks to revive some delayed projects, including a plan to build a branch of the Guggenheim museum, a senior official said.

The emirate, which sits on 6 per cent of global oil reserves, plans to award contracts for the museum by the end of this year or early in 2017, said Ali Majed Al Mansoori, chairman of the Department of Economic Development. The Guggenheim will be located in the emirate’s cultural hub on Saadiyat island, along with a branch of the Louvre, and the national Zayed museums, he said in an interview on Sunday.

Like other major oil exporters in the region, Abu Dhabi authorities slashed spending when crude prices plummeted to below $30 a barrel. The belt-tightening measures drew the attention of the International Monetary Fund, which said last month that the emirate, home to the world’s second-largest sovereign wealth fund, can afford a more gradual fiscal consolidation.

“The worst is behind us,” said Mr Al Mansoori, who is also a member of the Abu Dhabi Executive Council, the emirate’s top decision-making body. “Our budget is still strong. The majority of projects are still there and there are other smaller projects which are moving. The economy is moving.”

He expects growth to expand as much as 5 per cent in 2017, from about 2 per cent this year.

Abu Dhabi cut spending by a fifth in 2015 and plans a further 17 per cent reduction this year, according to the government’s latest bond prospectus. That’s more than a proposed 14-per cent cut in Saudi Arabia, which is facing widening budget deficits and must meet the demands of a much bigger population.

The emirate’s credit rating was maintained in May at Aa2 at Moody’s Investors Service, citing “very large fiscal buffers.” Fiscal consolidation could slow amid “pressure” to support growth, Moody’s economist Mathias Angonin said last month.

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