Abu Dhabi’s economic growth to slow in 2015
29 Jan 2015
(MENAFN) According to a new report by Moody’s Investors Service, the continuous plunge in global prices is expected to slow down the economic growth of Abu Dhabi in 2015, thus putting an end to four consecutive years of double-digit fiscal surpluses, Arabian Business reported.
“We expect that resources accumulated during years of high oil prices, and a prudent budgeting of oil proceeds, will mitigate the negative consequences of oil price volatility on Abu Dhabi’s fiscal and external accounts,” Moody’s said in its report.
Moody’s said that the emirate’s sizeable assets through its investment entities including in the Abu Dhabi Investment Authority, Abu Dhabi Investment Council, International Petroleum Investment Company (IPIC) and Mubadala, will help decrease the effects of the decline in oil prices on the economy, with its sovereign wealth fund Abu Dhabi Investment Authority (ADIA) alone holding an estimated USD498 billion in assets as of 2014.
The rating agency said that it estimates that real GDP will slow to below 3 percent from an estimated 4.1 percent in 2014, while the government is expected to record a fiscal deficit estimated at 1.1 percent of GDP for 2015
The report also pointed out that Abu Dhabi’s expenditures have been rising at a quick pace, with the spending increasing at a 15 percent rate between 2008 and 2013, due to an increase in federal services, including security and defense, and an increase in subsidies and transfers.