Abu Dhabi’s plans bode well for the overall economy
The last four years have been challenging for most oil-based economies, including the UAE. The low growth rate of 0.5 per cent in 2017 explains the impact low oil prices has had on the economy, which was growing at an annual average rate of 4.8 per cent between 2000 and 2014. However, the time of crisis has been used well by the UAE government to introduce bold reforms and changes that are likely to provide a strong foundation for the growth and development in years to come. The Abu Dhabi government, especially in the last couple of years, has facilitated consolidation in key sectors of real estate, oil and gas, and finance. It has strengthened public sector companies, the main drivers of growth and employment. The Abu Dhabi National Oil Company, for instance, offered oil and gas concessions for the first time to foreign companies. Aldar Properties inked an agreement with Tourism Development and Investment Company to acquire real estate assets worth Dh3.7 billion, in one of the largest real estate acquisitions in the country’s history. Aldar also entered into a Dh30 billion strategic partnership with Emaar to further develop UAE’s real estate and tourism sector. In the banking sector, the $14.8 billion merger of First Gulf Bank and National Bank of Abu Dhabi last year created the largest bank in the UAE.
The latest stimulus package of Dh50 billion is in line with this reform drive and will put the UAE on a more robust growth trajectory. The decision to inject more money through higher spending, and initiatives such as waiver of fees will prop up business sentiments and give an impetus to the non-oil private sector. Overall, the changes announced are monumental: reforms in licence processes, speedy payment methods for private sector contractors, proposals for Abu Dhabi Accelerators and Advanced Industries Council, increased partnerships between the public and private sectors and most importantly dual licences for companies in Abu Dhabi free zones. Such measures will make the economic landscape more competitive, attract more talent, create employment and increase consumption, which will further drive growth. Abu Dhabi has begun the process of creating a more sophisticated manufacturing base and industrialising its economy, which will have a ripple effect and benefit the UAE on the whole.