42 C
Dubai
Thursday, July 25, 2024
spot_img

Abu Dhabi Achieves Net Asset Position Equivalent to 336% of GDP

Abu Dhabi has achieved a net asset position equivalent to approximately 336% of its gross domestic product (GDP) in 2023, providing a robust buffer against external shocks, according to S&P Global Ratings. The rating agency affirmed ‘AA/A-1+’ sovereign credit ratings for Abu Dhabi, citing proactive policymaking. An increase in OPEC+ production targets in 2024 is expected to support real GDP growth and further strengthen the government’s fiscal position.

Economic Overview and Growth Projections

Abu Dhabi’s real GDP, which experienced a 9.3% growth in 2022, reaching Dh1.14 trillion, is projected to mildly contract by 0.4% in 2023 due to OPEC+ oil production cuts. However, a rebound of 4.5% is anticipated in 2024, bringing the GDP to Dh1.09 trillion. S&P emphasizes the stability of Abu Dhabi’s fiscal and external positions in the next two years, driven by prudent policymaking and assumptions in the hydrocarbon sector.

Fiscal Strength and Net Asset Position: GDP

S&P highlights Abu Dhabi’s exceptional strength in its net asset position, providing a crucial buffer against oil price volatility and geopolitical uncertainty. The stable outlook is based on expectations that fiscal and external positions will remain robust. The rating agency suggests the possibility of a rating downgrade if there is a significant deterioration in the government’s balance sheet and net external asset position.

Debt Management and Production Outlook

Abu Dhabi is projected to avoid deficit financing until 2026, and government gross debt is expected to decrease from about 16% of GDP in 2023 to around 13% in 2026. The rating agency anticipates annual external debt issuance of about $2 billion to maintain a market presence.

The medium-term outlook includes an increase in oil production as OPEC+ quotas are lifted, with the state-owned Adnoc expected to increase capacity to 5.0 million barrels per day by 2027.

Inflation, Geopolitical Stability, and Banking Sector

Inflation in Abu Dhabi, which rose to 5.6% in 2022, is projected to slow sharply to 0.2% in 2023. S&P expects limited impact from regional geopolitical tensions, emphasizing continued domestic stability. With a population of around 3.3 million, GDP per capita is expected to reach $84,900 in 2023. The non-oil sector’s recovery is driving higher lending growth, with marginal deterioration in banks’ asset-quality indicators expected.

Conclusion and Resilience

Abu Dhabi’s economic prosperity, heavily reliant on oil sector revenue, positions it with substantial buffers against potential external challenges. S&P acknowledges the emirate’s resilience and emphasizes its global standing as a significant crude petroleum exporter.

Also Read

Embracing Fitness in a 9-5 Life: Dubai Fitness Challenge Guide

Impact of Dubai Metro Blue Line on Property Prices and Rentals: Anticipated Rise along the Route

Related Articles

Alert Smart City: An Investment Opportunity to Revolutionize Crisis Communication in the Era of Climate Change

Leadership in Urban Resilience: The Journey of a Smart City in Crisis Communication Since its inception in 2019, Alert Smart City has been at the...

Srikanth Ravinutala and Adaapt AI : A Journey of Digital Transformation

Introduction Adaapt AI, led by Srikanth Ravinutala, is a pioneering AI-driven platform designed for digital transformation heads, enabling seamless adaptation to new technologies. By...

Explore the GCC’s Newest AI Innovation for Transforming Your Social Media Strategy!

Ardalan Zadehsoltan, founder and CEO of Unlock AI, launched the company to address social media management challenges faced by clients. With a background in...

Sreshta Farmer Producer Company Limited: Pioneering Technology-Driven Farming in Andhra Pradesh

Introduction to Sreshta Farms Sreshta Farmer Producer Company Limited (Sreshta Farms) was established in Kollipara, Andhra Pradesh, with the vision of creating a technology-driven agricultural...

Blockchain Life 2024 in Dubai Unveils First Speakers, Featuring Industry Leaders from Tether, Ledger, TON, Animoca Brands and More

Blockchain Life 2024 in Dubai Unveils First Speakers, Featuring Industry Leaders from Tether, Ledger, TON, Animoca Brands and More Blockchain Life 2024, one of the...

Latest Articles