Abu Dhabi economy recorded 11.6 percent growth in the first half of 2022, compared to the corresponding period in 2021, according to a statement issued by the Statistics Centre – Abu Dhabi (SCAD), making it the fastest-growing economy in the world this year, as per available information.
At the end of the first half of 2022, the real Gross Domestic Product (GDP) at constant prices exceeded Dh543 billion, and the value of the non-oil sectors’ GDP increased Dh28.4 billion compared to the same period last year to reach Dh273 billion in total.
“The growth reflects the emirate’s robust performance and the ability of the economy to maintain competitiveness and sustain growth despite global economic challenges,” the statement said.
According to estimates by SCAD, the quarterly GDP growth rate reached its highest value in six (6) years during the second quarter of 2022 which hit 11.7 percent compared to the same quarter last year.
“The statistical estimates show that all non-oil economic activities and sectors showed positive growth rates at constant prices during the first half of 2022, most notably, the health and social work activity rising at a rate of 29.9 percent, followed by accommodation and food services at a rate of 29.3 percent, and professional, scientific and support services at a rate of 27.2 percent, wholesale and retail trade activity at a rate of 23.7 percent, real estate activities at a rate of 19.1 percent, and electricity, gas, water, and waste management at 18.0 percent, followed by 13.8 percent for transportation and storage,” SCAD said.
The news comes a few days after the International Monetary Fund said the UAE economy will grow at 6 percent this year, up from 3.8 percent recorded last year.
Ali Al Eyd, of the IMF, said, “Economic growth has been robust this year, led by a strong rebound in tourism, construction, and activity related to the Dubai World Expo, as well as higher oil production in line with the OPEC+ production agreements. Overall, GDP growth is Ali Al Eyd projected to reach above 6 percent in 2022, improving from 3.8 percent in 2021.
“Inflation has risen with global trends and is expected to average just over 5 percent this year. Fiscal and external surpluses have increased further, benefiting from the higher oil prices as well as the removal of the temporary COVID-crisis related fiscal support to businesses and households as the pandemic has gradually waned. Increased global uncertainty led to larger financial inflows, contributing to rapid real estate price growth in some segments.”
Manufacturing activities represent 8.1 of the emirate’s economy, while showing a growth rate of 10.2 percent. In addition, the construction and building activity contributed to the real GDP with 7.7 percent, and achieved a growth rate of 6.9 percent, followed by the wholesale and retail trade activity that contributed 5.9 percent to the GDP. The financial and insurance activities contributed 5.5 percent to the GDP, with a growth rate of 9.1 percent during the first half of 2022 compared to the same period last year.
Mohamed Ali Al Shorafa, Chairman of the Abu Dhabi Department of Economic Development (ADDED) said:“Economy’s 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.
“The Abu Dhabi economy continues to reap the benefits of the effective policies guided by the wise leadership to strengthen the pillars and foundations of the economy, maintaining a competitive performance while attracting investments with more initiatives to achieve the strategic objectives of Abu Dhabi.”
The SCAD data shows that the mining and quarrying activities (including crude oil and natural gas) contributed 49.7 percent to the real GDP of Abu Dhabi emirate during the first half of 2022, which means non-oil activities contributed 50.3 percent at constant prices defying the noticeable increases of global oil prices during the same 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,” the statement said.
Ahmed Mahmoud Fikri, Director General of the Statistics Centre – Abu Dhabi, said: “Statistical estimates reflect the ability of Abu Dhabi’s economy to sustain rapid growth and respond quickly to plans and efforts to diversify the economic base and stimulus packages. The strategic plans and stimulus packages have produced huge growth, as most economic activities continue to expand with full alignment of economic sectors at the emirate level.”
The IMF said, the UAE’s economic outlook remains positive, however with uncertainties.
Ali Al Eyd said, “Looking ahead, the UAE economic outlook remains positive, supported by domestic activity. We expect non-hydrocarbon growth to be around 4 percent in 2023 and to accelerate over the medium-term with the implementation of ongoing reforms. Inflationary pressures are projected to moderate gradually, including from the impact of tightening financial conditions. Further development of domestic capital markets, including through the issuance of local currency debt by the federal government will also support growth.
“Nevertheless, the outlook is subject to significant external uncertainties, including the impacts of global economic and financial headwinds, geopolitical developments, and the recently announced OPEC+ production cuts. However, higher oil prices and healthy fiscal buffers help mitigate risks, while enhancing reform efforts would pose upside risks to medium-term growth. Given the macroeconomic outlook, near-term policies should focus on ensuring sustainable growth and maintaining financial stability, while guarding against inflationary outcomes.”
Also published on Medium.
