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Abu Dhabi's economic performance report by sectoral and macro indicators

posted on 11/07/2016: 2200 views



Abu Dhabi's macro economy saw robust performance in Q1 of 2016, reflecting continuous good growth rates at the end of 2015. Latest estimates issued by SCAD indicate that the GDP of Abu Dhabi, at the fixed prices, reached AED 196.1 billion in Q4 of 2015 with a growth rate of 7.7%, compared to the same period in 2014.

These results appeared in Abu Dhabi's Economic Performance Report in Q1 of 2016 as per Abu Dhabi's sectoral and macro indicators. The report is issued by ADDED, the Abu Dhabi Department of Economic Development's Studies Directorate.

Ali Majid Al Mansouri, ADDED Chairman, stressed that Abu Dhabi's local economy witnessed strong growth momentum in non-oil sectors in Q4 of 2015. Sectoral data indicates that the performance of some economic sectors in Abu Dhabi improved in Q1 of 2016, especially in the financial market, the tourism sector and non-oil foreign trade, as reflected by data issued by the Abu Dhabi Tourism Authority, Abu Dhabi Securities Market, and SCAD.

He pointed out that non-oil sectors enhanced economic growth in Abu Dhabi in Q4 of 2015, when non-oil GDP growth rate, at fixed prices, reached 8.8% compared to an oil GDP growth rate of 7.1%.

The chairman pointed out that the relative contribution of non-oil activities to Abu Dhabi's GDP increased to 50.7% in Q4 of 2015, compared to roughly 50.2% in Q4 2014, as per the estimates of SCAD. The good performance of non-oil sectors in Abu Dhabi demonstrates the positive impact of efforts to transform the fluctuations in world oil prices into an opportunity, with the objective of promoting economic diversity by enhancing non-oil activities.

"The performance of non-oil sectors reflects the flexibility and capabilities of Abu Dhabi's economy, as it has the essential economic foundations in terms of a solid financial situation, competitive business environment, attractive investment climate and social stability. Furthermore, it reflects its flexibility to accommodate challenges related to unfavourable developments in the international economy, transforming these challenges into opportunities to move forward towards more diversified economy and achieve the goals of the Abu Dhabi Economic Vision 2030," he concluded.

Khalifa bin Salem Al Mansoori, ADDED Acting Under-Secretary, said that the overall reading of the results of development indexes in Q1 of 2016 reflects continuous optimism and confidence amongst consumers and within the business community over the economic conditions in the emirate. This follows the growth momentum witnessed by the economy in Q4 of 2015. Meanwhile, Abu Dhabi and the UAE's efforts continue to contain the economic impact of international economic developments, especially the continuous fluctuations in oil markets.

He said that the General Index for Consumer Confidence has shown continuous optimism among consumers in Abu Dhabi across demographic and social levels in Q1 of 2016, as they have better expectations of the economic conditions and their future financial conditions.

The Acting Under-Secretary said that in the business sector, the General Index of Confidence in the Business Climate and its sub-indices have shown persistent optimism amongst economic establishments of various activities, sectors and sizes in Q1 of 2016, in spite of the fact that that the performance of the general indicator in 2016 was relatively affected by the decline of establishments' evaluation of their own internal conditions and sectors in Q4 2015, compared to the same period the previous year, which in turn affected establishments' optimism levels.

Regarding the results of the National Family Status Observatory, and according to the goods prices indicator, the Chairman of ADDED said that these results showed that prices are seen to be high by less numbers/groups of UAE national families in Q1 of 2016. Moreover, the consumption pattern of most national families of food commodities did not witness any change, despite their feeling of price increases in Q1 of 2016. The results also showed a decline in the percentage of borrowers from national family heads to the minimum levels, thanks to the initiatives and efforts of rationalising citizens' consumption and borrowing behaviour.

As for Abu Dhabi's sectoral performance indicators in Q1 of 2016, the latest data issued by Abu Dhabi Tourism and Culture Authority showed enhanced performance of the tourism sector in Q1 of 2016. The number of hotel guests increased by about 11%, compared to the same period in 2015, to approximately 1,115,547 guests. The number of hotel nights increased by about 10% to approximately 3,147,754 nights.

Occupancy rate in hotel facilities was about 79%, a decrease of 4% compared with the same period in 2015. However, the total revenues of hotel facilities went down by 6% to AED 1,719 million in Q1 of 2016 compared to AED 1,820 during the same period in 2015. By nationalities, guests from within the UAE recorded growth rate of 11% in Q1 of 2016, coming fifth after guests from Jordan, Egypt, India and the Philippines. UAE guests accounted for 32% of the total guests in Q1 of 2016. Indian guests came second with 7%.

In the real estate sector, the Jones Lang LaSalle annual report, which monitors real estate performance in Abu Dhabi, marks stability in housing unit rental rates in Q1 of 2016, despite the continuous decline in oil prices. Real estate market data indicates that available real estate units decreased due to lower demand. Consequently, rental rates were stable and market data reflected a decline in real estate trading volume for housing units in Q1 of 2016 owing to lower optimism levels amongst investors as a result of lower oil prices.

As for Abu Dhabi's non-oil foreign trade in Q1 of 2016, the report highlighted that the total value of Abu Dhabi's non-oil foreign trade in goods in January - February 2016 has grown to AED 30.8 billion, about 7.7% growth rate compared to the same period in 2015. This was the result of a higher rate of non-oil exports by 69.7% to AED 9.8 billion, while the value of imports and re-exports decreased -9.1% and about -0.5%, respectively.

The considerable increase of non-oil exports during January - February 2016, compared to the same period in 2015, was due to the emirate's higher volume of exports in terms of consumer goods (food and beverage), by 316.4%, and transport equipment and its parts by 310.3%.

According to SCAD's released data, most of the emirate's non-oil exports went up in January - February 2016 compared to the same period in 2015, except for fuel and lubricating oils products, which slightly decreased (-18.8%).

As for the developments in the emirate's financial market in the first quarter of the current year, the Economic Performance Report showed an improvement in closure indexes of Abu Dhabi Securities Exchange during Q1 of 2016, compared to Q4 of 2015. The ADX General Index increased by 1.9% as it closed transactions at 4,390.42 points at the end of Q1 of 2016, compared to 4,307.26 points at the end of Q4 of 2015.

A few indices have surged, including the energy sector by (2.41%), the real estate sector by (19.41%) and the telecommunication sector by (14.91%). Other indices have dropped, including the banking sector, (-5.51%), the consumer goods sector (-0.01%), the industrial sector (-1.98%), the investment and financial services sector (-2.04%), and the insurance sector (-2.09%). The market has seen a rise in foreign investors' purchases who acquired 57.10% of the total number of purchase transactions during Q1 of 2016 compared to 53.33% in Q4 of 2015.

According to the report, the stability in oil prices above US$30 per barrel contributed to improving the ADX indices. The price of Abu Dhabi Murban crude increased in February 2016 to $33.00 per barrel compared to $30.0 per barrel in January.

Going by sectoral indicators, the real estate sector comes first in terms of high index value in Q1 of 2016 when compared to Q4 of 2015. Trading volume surged by 191.8% from 1,756,324,237 shares in Q4 of 2015 to 5,124,215,197 shares in Q1 of 2016. The trade value increased by 107.4%, from AED 2.4 billion in Q4 of 2015 to AED 4.9 billion in Q1 of 2016.

These numbers indicate the rise of traded shares of real estate companies in Q1 of 2016, which reached 57% of the total market trades compared to 37.45% in Q4 of 2015. The percentage of trading value increased 32.86% in Q1 of 2016 compared to only 15.49% in Q4 of 2015.

Trading in the energy sector has surged by 47.54%, from 1,372,046,323 shares in Q4 of 2015 to 2,024,346,198 shares in Q1 of 2016. Accordingly, the oil sector ranks second in terms of its contribution to the overall amount of trading in traded shares during Q1 of 2016 which reached 22.52% compared to 29.25% in Q4 of 2015.

Most of the sectors have seen a decline in terms of closure index values at the end of March 2016 compared to the end of December 2015. However, most of these sectors have recorded high rates of market trading in Q1 of 2016 compared to the last quarter of 2015, including the sectors of banking, industry, investment and financial service, and insurance.

In the Emirate of Abu Dhabi, UAE nationals own the majority of shares, amounting to 82.2% at the end of March 2016, leaving only 17.8% to foreign investors.

The services sector comes first in terms of UAE nationals' ownership of its shares, accounting for 97.7%. The insurance sector comes second with 95.2% and the consumer goods sector comes third with 88.9% for locals. Released data have shown that expatriates are interested in investing in the shares of electronic fund, debt instruments, energy, and real estate at the rates of 46.6%, 32.6%, and 25.7% respectively.

According to ADX data, the majority of shares purchasing and selling transactions were made by UAE national, accounting for 50.2% and 42.9% respectively while expats' transactions reached 49.8% and 57.1% respectively.

Individuals have had the lion's share in trading volume in Q1 of 2016, with 8,425,295,355 shares purchased or 77% of the total purchase volume. They also accounted for the 79.9% majority of the selling volume or 8,745,273,300 shares sold. The remaining percentages were corporate trades accounting for 23%, and 20.1% respectively compared to 40.3% and 27.6% in Q4 of 2015. This can be a great challenge for the financial market if the total demand levels have generally continued to go down in the emirate.

As for the Q1 2016 inflation rates in the Emirate of Abu Dhabi, the CPI of Abu Dhabi has recorded 105.6 points on average during Q1 of the current year. According to the reports issued by SCAD, the annual inflation rate reached 3.2% during the quarter, as expenditure groups contributed to high CPI values during Q1 of 2016.

Residence, water, electricity, gas and other kind of fuel greatly contributed to high CPI values, as its contribution rate reached 79.7% as a result of the increase in their prices by 7.7%. The relative weight of this group is 31.2% of the total weight of main expenditure groups within the CPI market basket.

The Abu Dhabi Economic Performance Report for Q1 of 2016 indicated, according to Nielsen's Consumer Confidence Index, that the United Arab Emirates has been in advanced positions in terms of the levels of consumer confidence in economy during 2015. The UAE's consumer confidence improved during Q4 of 2015, scoring 108 points compared to its level during Q3 of 2015 which scored 107 points. This reflects the country's consumer confidence in economic conditions in the wake of the challenges faced by many global economies, particularly the economies of oil-exporting countries.

The Purchasing Manager Index, PMI, of non-oil private companies, issued by Markit in cooperation with Emirates NBD, scored 54.5 points in March 2016 after reaching 53.1 points in February 2016, reflecting an improvement in private sector performance. However, analysts point out that the PMI's average value during Q1 of 2016 reflects a slowdown in non-oil private companies' activities, given the economic development at both internal and external levels. - Emirates News Agency, WAM - http://www.wam.ae/en/news/economics/1395297609295.html

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