The Emirate’s economy grew by 15.9% in nominal terms in 2010, from Dh535bn ($145.6bn) to Dh620bn ($168.8bn), according to data released by Abu Dhabi’s Chamber of Commerce.
Oil continues to account for about half of GDP, with non-oil activities achieving notable growth. This includes the manufacturing sector which increased by 10.8%.
The Emirate’s GDP is projected to grow in the range of 6% to 8% in 2012, supported by increases in oil revenues and government spending.
In 2012, the Abu Dhabi authorities remain dedicated to investing in diversification of the local economy.
The government’s move to develop free-trade zones, in line with its long-term plan to boost the role of the private sector in the economy, is aimed at turning the region into a driving force for economic growth in the future.
The general strategy is designed to shift the government’s role from provider to regulator, putting the private sector at the heart of Abu Dhabi’s economic development.
Continued government spending on infrastructure, and other development projects in various areas, has led to the revival of the local economy.
A rise in industrial activity reflects the government’s efforts to promote this sector as one of the pillars of sustainable development.
The manufacturing base is strengthened by the continued development of the Khalifa Industrial Zone, Abu Dhabi (KIZAD). This 420-sq-km industrial area was launched in 2010 and will eventually be integrated with Khalifa Port. By 2030, the zone is expected to account for 15% of the Emirate’s non-oil GDP, in addition to providing around 100,000 jobs.
Up to the end of the first half of 2011, more than 100 firms had applied to set up operations at KIZAD. Performance of the zone in terms of attracting foreign investors reportedly exceeds projections.
The government also granted free-zone status to the properties of Abu Dhabi Airports Company (ADAC) which will develop zones around Abu Dhabi International, Al Bateen and Al Ain International airports.
The twofour54 free zone was designed as a media hub and is home to the regional offices of CNN and the BBC. It has been in operation since 2008.
Advantages of free-trade zones in Abu Dhabi include 100% foreign ownership, certain tax exemptions and discounts on energy and land costs.
Despite minor delays in the tourism sector, the Emirate is also continuing to encourage contributions from international investors. These could include expertise and technical capacity, in addition to capital. These are potentially important factors to help the Emirate shift away from its traditional economic dependence on the hydrocarbons’ sector and create jobs for its citizens.
The three museums – Abu Dhabi branches of the Louvre and Guggenheim, and the Zayed National Museum – will become a part of the art and culture complex located on Saadiyat Island.
Progress towards long-term diversification is the main objective of various government initiatives in Abu Dhabi.
Key elements of the Emirates’ economic diversification programme, including the development of the manufacturing base, are moving ahead as planned, with the government reiterating its commitment to encourage investment.
Within the financial sector, lending rose to its highest point in 2011. Capital markets have also been marked by increased initial public offerings.
Manufacturing is benefiting from ongoing investment, with base metals and petrochemicals playing important roles.
Oil revenues and the Emirate’s sovereign wealth funds are helping to underwrite massive infrastructure upgrades which can facilitate future economic growth.
Legal reforms are making investment easier and information collection more efficient.
In addition to encouraging growth in a number of different sectors, the government is focused on building better business environments for small and medium-sized enterprises.
2012 started on a note of optimism amidst an environment of improving economic conditions in the capital of the United Arab Emirates.
Anticipated economic expansion will continue to be driven by an increased non-oil sector performance.
Abu Dhabi’s economy looks set to benefit from increased private sector participation at all existing levels.
The Abu Dhabi Department of Economic Development is planning for sustained growth in non-oil activities and estimates that such activity will generate 64% of the Emirate’s income by 2030.
Political unrest in other Middle East countries has had a significant impact on oil prices, pushing them higher. Revenue from oil and related industries is clearly the key source of income for Abu Dhabi. Government authorities are exploring multiple options for future development due to the huge budget surplus the local economy is likely to enjoy in the coming years.