ABU DHABI (Reuters) - Abu Dhabi’s economy is expected to grow by up to 4 percent this year and the Gulf emirate is comfortable with oil prices at around $80 a barrel, a government official said on Monday.
An oil-producing member of the United Arab Emirates federation, Abu Dhabi is seen as the main engine behind recovery of the second largest Arab economy this year, as neighboring Dubai restructures its large debt pile. “It (GDP growth) will rise to 3.5-4.0 percent,” Hamad Abdullah al-Mass, executive director for international economic relations at the Department of Economic Development told Reuters in an interview on the sidelines of a conference. “The main driver is not directly the oil. There are many sectors that will play a stronger role in our GDP,” he said.
Abu Dhabi, which aims to gradually boost non-oil revenues, accounted for nearly 56 percent of the UAE’s total gross domestic product in 2008.
Mass said GDP figures for 2009 were not yet available but added the emirate’s economy seemed to expand in line with the department’s forecast for 3-3.5 percent growth.
The UAE, the world’s third largest oil exporter, should grow by 2.9 percent this year, but some economists have said the pace could be more modest due to jitters around Dubai’s debt.
Dubai received a $5 billion lifeline from Abu Dhabi in December after it requested a repayment freeze on $26 billion in debt linked to its flagship companies.
The UAE’s economy was expected to shrink by 1.1 percent in 2009 after 7.4 percent growth in the previous year, due to impact of the global financial crisis.
Last year’s GDP data are not available but the economy minister has repeatedly said UAE growth for 2009 would come in at 1.3 percent.
Mass also said Abu Dhabi is comfortable with current oil prices, while positive GDP data from countries such as China would ensure oil demand was going to stay.
“It is very economical to us and this is what we feel is comfortable if it stays at this level. We do not want it to be higher,” he said.
The oil sector now contributes almost 60 percent to Abu Dhabi’s GDP, but the emirate plans to reduce its share to 40 percent by 2030.
Editing by Patrick Graham