Standard & Poor's Ratings Services forecasts stable outlook for Abu Dhabi and said that its economy would remain resilient.
The ratings agency affirmed its ‘AA' long-term and ‘A-1+' short-term foreign and local currency sovereign credit ratings on Abu Dhabi and said the outlook is stable.
"The ratings are supported by Abu Dhabi's strong fiscal and external positions, which afford it fiscal policy flexibility. The exceptional strength of Abu Dhabi's net asset positions also provides a buffer to counter the negative impact of oil price volatility on economic growth and government revenues, as well as on the external account,” the rating agency said in a statement.
S&P's estimates GDP per capita at US$102,000 in 2014 for Abu Dhabi. Economic growth is supported by rising oil production, high public spending, and a broadening of the economy's production base, including services and manufacturing, it added.
"Real growth and nominal growth levels have been robust. We believe, however, that in a heavily resource-endowed economy such as Abu Dhabi, nominal GDP growth — which averaged 11 per cent annually during 2007-2013 — is a better measure of prosperity and could substantially cushion potential risk,” S&P's said.
"We assume that oil prices will moderate to about US$100 per barrel (bbl) in 2016 and beyond, from about US$105 per bbl in 2014. Consequently, we estimate the fiscal surplus will average about seven per cent of GDP (including Abu Dhabi National Energy Company dividends) in 2014-2017, helping to bolster the emirate's net asset position, which we project at more than 200 per cent of GDP over the same period. The government has strengthened its oversight over public-sector debt, aiming for sustainability and the prevention of financial stress at its government-related entities (GREs),” the statement said.
Source: Khaleej Times