Abu Dhabi economy show continuous good performance of non-oil sectors

ABU DHABI, 23rd March, 2016 (WAM) -- By the end of Q3 of 2015, Abu Dhabi's GDP (with fixed prices) was about AED200 billion, with a growth rate of 5.5%, compared to the same period during 2014, according to the latest estimates from the Abu Dhabi Statistics Centre. Through the outstanding performance of its activities, the non-oil sector contributed to strengthening Abu Dhabi's economic performance noticeably during Q3 of 2015, where the growth rate of non-oil GDP with fixed prices was 7.1%, compared to 3.9% for oil GDP. This is revealed in Abu Dhabi's 2015 Economic Performance Report, issued by the Abu Dhabi Department of Economic Development, ADDED’s Studies Department, based on the results of aggregate and sectorial indicators of Abu Dhabi economy, which shows a review of Abu Dhabi's economic performance last year through a detailed reading of the results of these growth indicators. Ali Majed Al Mansouri, Chairman of ADDED, stressed that the continuous good performance of Abu Dhabi's non-oil activities in 2015 reflects the successful efforts made to transform the challenges of fluctuating global oil prices to opportunities for more diversity of economic structure through strengthening the performance of non-oil activities, to achieve the goals of Abu Dhabi Economic Vision 2030. He said that according to the estimates of Abu Dhabi Statistics Centre regarding the GDP in current prices, relative contribution of non-oil activities in Abu Dhabi's GDP has increased to a record level in Q3 of 2015, reaching 65% compared to 49.1% in 2014. Al Mansouri indicated that the global economy witnessed many unfavourable developments during 2015. Fluctuating global oil prices continued, where the average price of Brent crude was 37.97 USD/barrel in December 2015, compared to 62.34 USD/barrel in December 2014. Furthermore, the performance of the group of emerging markets and developing countries’ economies, including those exporting staple commodities, was weak as a result of the slowdown and deflation of a number of major economies in the group, like China, Russia and Brazil, as well as the unexpected performance of major economies in the group of developed economies. Ali Majed Al Mansouri said that the overall reading of the results of Abu Dhabi growth indicators in 2015 generally reflects continuous optimism and confidence among consumers and the business community, including foreign investors, industrialists and businesswomen, regarding the economic conditions in Abu Dhabi. Their evaluation of the current economic conditions was generally positive and they had optimistic expectations for the future. He clarified that this comes in parallel with Abu Dhabi and the UAE's persistent efforts to overcome the economic impacts of the developments of global economy, particularly the continuous fluctuations in oil markets. He also pointed out that the trends of growth indicators in 2015 shows a relative decline in the levels of optimism among consumers and business communities compared to 2014, with respect to the levels of relevant indicators. He added that the general indicator and sub-indicators of consumer confidence show continuous optimism among consumers in Abu Dhabi, with their various demographic and social characteristics, in 2015 as a result of their positive evaluation of the current conditions, considering their financial status and the economic conditions in general, and their optimism about future economic conditions and their financial status. The Chairman of the Abu Dhabi Department of Economic Development said that in the business sector, although the general indicator of confidence in business climate and its sub-indicators show the persistent optimism of operating economic facilities about the various activities in 2015, according to the facilities' positive evaluation of their internal situation, business sectors and Abu Dhabi economy as a whole, the performance of the general indicator in 2015 was relatively affected by the decline of the evaluation levels compared to 2014. Accordingly, this was reflected in the levels of optimism of these facilities. He elaborated that the results of the industrial sector showed the persistence of optimism among industrial facilities operating in Abu Dhabi in 2015. Al Mansouri explained that the results of the demand trends indicator of the labour market showed enhanced performance of Abu Dhabi labour market. The private sector continued to create new and diverse job opportunities under the developments taking place in Abu Dhabi business environment and investment climate. This led to a remarkable increase in the overall demand for labour, including most of the economic activities, during Q1 of 2015, compared to the same period in 2014. He added that the results of transparency indicator of foreign direct investment policies in Abu Dhabi in 2015 reflected that investors and businessmen still feel high levels of transparency in the policies formulated by the Federal Government and Abu Dhabi Government. This represented a major incentive for attracting foreign direct investment to Abu Dhabi, under the effective and efficient relevant governmental policies. He said that the results of Abu Dhabi Businesswomen Council in 2015 showed that most businesswomen have an optimistic view about the performance of Abu Dhabi economy within the next two years. The results also reflected the optimism of most businesswomen about the future status of their facilities, where they illustrated that they have plans to increase the growth rate of their businesses. He said that the results of the financial sector performance indicator showed that banks operating in the UAE have a strong base of capital and reserves, that contributed to achieving high levels of capital solvency. This strengthens the ability of banks to offer the necessary funding for various economic activities. Regarding the results of the National Family Status Observatory, and according to the goods prices indicator, the Chairman of Abu Dhabi DED said that these results showed that prices are seen to be high by greater numbers/groups of national families in 2015, including prices of food commodities. Moreover, the consumption pattern of most national families of food commodities did not witness any change, despite their feeling of price increases in 2015. The results also showed a decline in the percentage of borrowers, from national family heads to the minimum family levels, depending on the success of the initiatives and efforts of rationalising citizens' consumption and borrowing behaviour. According to the report results, the latest data issued by Abu Dhabi Tourism and Culture Authority show the enhanced performance of the tourism sector in 2015. The number of hotel facility guests increased by about 18% during the period January-November 2015, compared to the same period in 2014, to approximately 3,716,118 guests. The number of hotel nights increases by about 15% to 10,883,362 nights. Accordingly, the total revenues of hotel facilities increased by 6% to AED5,992 million. Rate of occupation in hotel facilities was about 75.2% during the aforementioned period, with a slight increase of 1% compared with the same period in 2014. Internal tourism flourished during January - November 2015, compared to the same period in 2014. It increased by about 19% in 2015, where the number of guests from the country constituted 33% of the total number of guests in the same period, followed by India in second place, then the United Kingdom. Internal tourism recorded a growth rate of about 12% in the average accommodation period for January -November 2015, compared to the same period in 2014. Except for KSA, Kuwait and Egypt, other countries achieved negative growth rates in the average accommodation period during the aforementioned period in 2015, compared to the same period in 2014. Statistics showed a large increase in the growth rate of guests during the period January - November 2015 compared to the same period in 2014, particularly from China (57%), South Africa (41%), Ireland (38%), Italy (28%), Philippines and USA (28%) each. As for the real estate sector, the data issued by Abu Dhabi Statistics Centre shows the decline of the standard rental rates from 110.1 points from December 2013 to December 2014 to 107.1 points for January - November 2015. Depending on the type of housing, the indicator recorded its highest levels for small houses consisting of one or two rooms. The indicator recorded 108.4, 108.2 and 108.9 respectively, which is a normal situation as a result of non-national families' increasing demand for small houses in general. According to the indicator results, the rental rates of most housing types declined during the period January - November 2015 compared to the period December 2013 - December 2014, including residential units in towers. The indicator of rental rates for villa compounds was about 102.9 points compared to 103.0 points in the two aforementioned periods respectively, while for towers it was 107.3 points compared to 110.4 points respectively. During the period January - November 2015, the indicator of rental rates reached its lowest levels at Al Reem Island, Khalifa City and Al Samha East, where the value of the indicator was about 96.7, 92.5 and 79.2 points respectively. The standard rental rate reached its highest value at Al Shahama district, recording 127.5 points. Reports on the performance of Abu Dhabi real estate market indicate that residential leases in 2015 were 4% up, compared with 2014. The JLL annual report 2015 marks a drop in real estate units demand in 2015, as well as the reduction of government spending and willingness of real estate developers to reduce supply in line with demand in order to keep the rates of real estate units without a drop, resulting in only 1,000 new real estate units introduced. The report highlighted that according to the latest data, the total value of Abu Dhabi’s non-oil commodity foreign trade in the period January – September 2015 was up to AED123.4 billion, with about 9.5% growth compared to the same period of 2014. This was the result of higher rate of individual non-oil commodity exports up to 63.8%, with the value of exports at AED23.6 billion during the same period of 2015, as well as the higher rate of imports by 8.2% up to AED86.6 billion. Re-exports dropped by 27.7% to about AED13.2 billion during the period January – September 2015, compared to about AED18.2 billion in the same period of 2014. The top imports were industrial supplies, with 37.2% of total non-oil commodity imports. The data reflects that almost 88.1% of total non-oil commodity imports are the imports of industrial supplies, production goods and transport equipment, while consumer imports (food and beverage) only represent a limited percentage of about 5.7%. It is noted that the contribution of non-oil commodity exports to total foreign non-oil trade was up by 19.1% during the period January – September 2015, compared to 12.8% in the same period in 2014. As for capital markets, Abu Dhabi's 2015 Economic Performance Report said that closure indexes of Abu Dhabi Securities Exchange fell relatively in 2015 compared to 2014. The ADX General Index closed transactions in 2015 at 4,307.26 points, compared with 4,528.93 points at the end of 2014, with a 4.9% drop. According to the report, the indexes of investment and financial services sector fell by -23.03%, insurance -22.32%, services -17.6%, banking -17.24%, real estate -15.37%, energy -10.96% and industry -2.74%. The ADX witnessed reluctance from portfolios and investors to strongly engage during the most time periods in 2015 and especially in Q3, driven by the events in Chinese capital markets. The report emphasised that the performance of Abu Dhabi’s capital market in 2015 has been affected by the low oil price, where the price of Abu Dhabi’s Murban crude continued to drop from around 60.7 USD/ barrel in December 2014 to around 37.25 USD/ barrel in December 2014, in addition to declining levels of demand and low purchasing power. The declining growth rates in China and Japan also contributed to the decline in Abu Dhabi Securities Exchange’s indexes. The index of investment and financial services is the lowest among the nine indexes comprising the ADX index. The volume of dealings in such sector declined from about 3,079,676,291 shares in 2014 to almost 707,150,177 shares in 2015, with 77% drop. The trading value also declined from AED9 billion in 2014 to AED1.9 billion in 2015, with a recession of about 79%. These figures indicate declined amount of shares traded in investment and financial services’ companies in 2015 with 2.78% of total traded shares in the market, compared with 5.27% in 2014. Also, the percentage of trading value of the total trading values declined to about 3.26% in 2015, while it was 6.2% in 2014. Amounts of trading in the real estate sector also declined, as trading volume recessed from about 37,198,275,877 shares in 2014 to about 13,802,855,473 shares in 2015, i.e. 63% drop. However, it is still the higher contributor in terms of trading of total traded shares in the market in 2015, with around 54.3% compared to 63.7% in 2014. In average, most sectors had declined closure indexing in 2015 compared with 2014, except for the telecommunication and consumer staples. Insurance and telecommunications are the only sectors that made a growth rate of trading amounts in 2015, although their respective indexes have declined. The telecommunications sector was the only one among the nine sectors that had higher trading value in 2015, with around AED13.7 billion compared to almost 7 billion in 2014. UAE nationals hold the majority of shares in Abu Dhabi, around 80.8% as at the end of December 2015 compared with 82% in 2014. In terms of nationals’ holdings of companies’ stock, the services’ sector is at the top with 97.6%, insurance comes second with 94.6% and finally consumer goods with 89.4%. The data indicates that expatriates are interested in the stocks of e-fund, debt instruments and energy, with 47.4%, 46.7% and 33.1% respectively. The Abu Dhabi’s Economic Performance Report states that according to ADX’s data, the majority of sales and purchases of stocks made by nationals, were recorded at 58.8% and 56.4% respectively. For non-nationals, they recorded 41.2% and 43.6% respectively. These rates are low compared with 2014, where the rates of sales and purchases by Arabs and foreigners were higher. Individuals have the largest percentage of total trading volume in 2015 with purchases of 19,310,959,857 shares, i.e. 69.4% of total purchases, and the largest percentage of sales volume with 73.7% totalling 20,501,088.008 shares. The complementing ratio is the total trading for companies, which was 30.6% and 26.3%, compared to 33.8% and 30.8% in Q2 of 2015. The report highlights that such rates reflect low corporate turnout for trading by sale and purchase. This is due to fogginess in the economies of major countries and dramatic declines in global stock exchanges in the Q3 of 2015, as well as high USD interest rates. For the index of standard prices of Abu Dhabi’s consumers, the report explained that it recorded monthly increases during most months of 2015, which ended at 138.1 points in December 2015, compared to 131.2 points in the same month of 2014. It is noted that the new tariff of water and electricity services was applied in January 2015. Also, fuel prices were liberalised in August. This was reflected in the standard prices for consumers which in turn reflected the annual inflation rates in Abu Dhabi in 2015, which was recorded 5.4% for the said year, according to SCAD reports. Abu Dhabi’s inflation rate in 2015 was affected by the increased rates of residential water and electricity services since January. The analysis of contributions of the groups forming the Abu Dhabi’s consumer basket to total changes to the recorded consumer prices during the period January-February 2015 demonstrates an increase in the contribution ratio of the group "housing, water, electricity, gas and other fuels" to total changes to the standard consumer prices, where such ratio reached around 85.4%. The relative weight of this group constitutes about 37.9% of total weight of major spending groups in the consumer basket. – Emirates News Agency, WAM - http://www.wam.ae/en/news/economics/1395293219265.html