Abu Dhabi, the largest emirate that comprises the UAE, is its industrial and political center. It may not be as populous as Dubai, but it has recorded rapid development and urbanization. The emirate also shows excellent economic performance, which is proven by its low unemployment rate. As with other countries, Abu Dhabi is facing a COVID-19 outbreak. How did this outbreak affect the Abu Dhabi economy?
Abu Dhabi Economic Growth before the COVID-19 Outbreak
In 2019, the emirate’s economy expanded steadily due to its growth and economic stimulus plan. In terms of per capita income and GDP, Abu Dhabi is considered the wealthiest emirate in UAE. In 2018, its GDP amounted to US$414 billion, and GDP Per Capita accounted for US$43,005. Meanwhile, in the third quarter of 2019, Abu Dhabi’s GDP grew at 4.6%.
The primary source of the GDP is the oil and gas sector. However, this sector is not as large as before that the government tries to boost the development of the emirate’s e non-oil and gas sector. In 2018, the emirate launched a stimulus plan called Ghadan 21. Abu Dhabi injected several billions of US dollars of funds to support small local businesses, research and development, and tourism and entertainment sectors.
The government aims to boost the private sector’s contribution to Abu Dhabi’s GDP from 32% in 2019 to 37% in 2021. In 2030, the emirate aims to have a sustainable economy that is not dependent on the oil and gas sector.
Abu Dhabi Economic Growth During the COVID-19 Outbreak
The year 2020 is not an easy year for Abu Dhabi, the COVID-19 outbreak, and low oil price caused economic disturbance for the emirate. S&P Global Ratings estimate that Abu Dhabi GDP will decrease at the level of 7%. Meanwhile, the local government predicted that the GDP would fall by 3% to 4%.
Despite these predictions, the economy of Abu Dhabi is considered resilient in terms of external shocks. So far, the government hasn’t stopped any capital investment. An economic stimulus package worth billions of US dollars has been launched to lower the impact of the outbreak on the citizens and businesses and achieve Abu Dhabi’s economic diversification goals.
This emirate’s government is quite optimistic about its economic growth in the next two years, i.e., 2021 and 2022. They predict that the emirate’s economy will grow at the level of 6% to 8% in those years, with foreign investment, government spending, the oil sector, financial services as the key drivers.
Furthermore, the emirate is planning to invest in advanced technology, such as e-commerce and artificial intelligence, since Abu Dhabi is positioning itself as a tech hub and attracting companies in healthcare, agricultural technology, and renewable energy sectors. Those sectors are crucial for the emirate’s economic growth.
Based on the facts above, foreign investors and multinational companies across healthcare, renewable energy, or agricultural technology companies have a great potential to enter the related sectors in Abu Dhabi.
