BMI lowers Abu Dhabi GDP growth forecast for 2017

Fitch Group unit BMI Research has lowered its 2017 economic growth forecast for Abu Dhabi due to continued pressure from lower oil prices.

In a report released on Thursday, BMI said it expected real GDP growth in the emirate of 1.8 per cent this year from the 2.6 per cent it estimated previously.

“Accounting for around half of Abu Dhabi’s GDP, the oil sector remains the primary determinant of economic expansion in the emirate,” BMI said.

Abu Dhabi’s economy grew 2.8 per cent last year, according to the firm.

BMI said it expected growth to pickup again in 2018 as oil production increases following the end of a self-imposed production cap by members of the Organisation of the Petroleum Exporting Countries (OPEC).

OPEC and several non-OPEC producers including Russia have agreed to cut oil output by a combined 1.8 million barrels per day from January 2017 until March next year.

The deal initially saw prices rise to $58 per barrel in January but they have since declined to $45-$50 due to excess inventories and weak compliance from some members.

Read: Saudi calls OPEC members to stick to limits, sees oil demand up

Last week, OPEC forecast higher oil demand in 2018 due to rising global consumption.

Read: OPEC sees higher oil demand in 2018

BMI is forecasting 2.9 per cent growth in the Abu Dhabi economy next year, supported by “significant positive signs in the non-oil economy” including increased spending on infrastructure linked to Dubai Expo 2020 and growing foreign direct investment.