This week, authorities in Abu Dhabi announced high growth figures for 2006, plans for further economic expansion and forecasts for 2007.
Speaking at the Abu Dhabi 2006 conference, Chairman of the Department of Economy and Planning Sheikh Hamed Bin Zayed Al-Nahyan, told delegates, "Our goal is to make the government more compact and efficient while creating greater transparency and accountability in order to better serve the nation and the economy." It has been stated that the emirate has a five-year spending plan worth $175bn, largely targeting industrial and construction projects. Sheikh Hamed advocated dispersing investments through a number of public-private partnerships in several different sectors with the support of the government's vast hydrocarbon wealth.
The Abu Dhabi Chamber of Commerce and Industry has predicted that nominal GDP will grow by 13.25% in the emirate this year, rising to Dh341bn ($92.84bn). Investments are also expected to hit Dh587.2bn ($159.87bn) for the next five years. Meanwhile, the ministry of economy predicts that the UAE's nominal GDP will hit $162.6bn in 2006, representing an increase of 23% over 2005. Sheikha Lubna Al-Qasimi, the minister of economy, also said investment will grow by 24.9% to $31.9bn.
The ministry's figure is slightly higher than other predictions for GDP in 2006. The National Bank of Abu Dhabi (NBAD) predicts that GDP will hit $161.3bn for 2006, while Business Monitor International (BMI) puts it at $151bn. The IMF, on the other hand, has projected real GDP growth of 11.5% raising the total figure to $176.8bn this year. The outlook seems positive for 2007, as well, with BMI predicting GDP growth of 8%.
Most of 2006 has been a bumper period for oil exporters. According to Sheikha Lubna the average price of oil for the whole year is expected to be $67 per barrel, as compared to $51 per barrel in 2005. The NBAD has stated that the hydrocarbon sector accounted for 40.7% of GDP in 2005, a figure substantially higher than the 13-year average of 35%. With the Abu Dhabi National Oil Company (ADNOC) looking to substantially increase capacity over the next five years to as much as 4m bpd by 2010, the hydrocarbons sector will inevitably remain a key driver of the economy. Indeed, hydrocarbon exports have had a significant impact on the country's current account surplus with NBAD projecting a figure of $28.1bn or 17.4% of national income for 2006.
However, as Sheikh Hamed was keen to point out, the non-hydrocarbons sector is continuing to expand in line with diversification policies.
Heavy industry and manufacturing are areas of particular focus in Abu Dhabi. The nascent plans for the Khalifa Port and Industrial Zone (KPIZ) illustrate the ambition of the emirate in this area. The industrial zone which will cover 100km2 in the first phase will serve several industrial sectors including base metals, heavy machinery, transport vehicle assembly, chemicals, shipyards, building materials, processed foods and beverages, medium and light industry, small and medium industry, trade and logistics, information and communication technology, and clean technology and alternative energy. The zone will be home to the Mubadala and Dubal aluminium smelter as well as a steel mill. The port and industrial zone are expected to increase the trade volumes entering the emirate with the Abu Dhabi Ports Company predicting a compound annual growth rate (CAGR) of 12%. This has led to predictions of 20.66m tonnes of general cargo by 2015 and 29.8m tonnes by 2020.
KPIZ has the potential to be a significant contributor to economic growth in the emirate illustrating the determination to diversify away from oil and gas. The stated aim of the zone is to increase industrial productivity by strengthening the competitiveness of industrial clusters as well as expanding trade through higher levels of non-oil exports and foreign direct investment (FDI).