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01-12-12

Abu Dhabi economy to expand by 5% in 2012: S&P

(MENAFN) Ratings agency Standard & Poor's (S&P) has affirmed Abu Dhabi's long-term and short-term sovereign credit ratings at AA and A-1+ affirmed, Arabian Business reported. S&P has also forecasted that the Gulf emirate's economy to grow about five percent this year. The rating agency also estimated that GDP per capita for 2012 would be USD110,000, making Abu Dhabi one of the wealthiest economies in the world. S&P said that Abu Dhabi's real GDP grew by 6.8 percent in 2011, driven by strong performance in the oil sector. However S&P expected the rate to cool to five percent this year. Non-oil economy grew by four percent, S&P estimated, driven by activity in the financial sector, manufacturing, and transport, as Abu Dhabi boosts spending, and strives to diversify its economy. The ratings agency expected Abu Dhabi's fiscal surplus to reflect 15.4 percent of GDP this year, up from 13.4 percent in 2011, assuming an oil export price of USD112 per barrel. S&P said that Abu Dhabi will see revenue growth of 57 percent which will accommodate a 25 percent increase in expenditures, including hikes in development spending, ongoing financial support to government-related entities (GREs), and assistance grants. On the other hand, S&P said the ratings were constrained by its view that the emirate "has weak political institutions, a lack of transparency and public accountability, and limited availability of timely financial and economic data, particularly regarding government assets". It added that the ratings could come under pressure if there was a "sharp and sustained decline in oil prices" or if there were a prolonged depletion in the government's asset position.

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