Abu Dhabi’s economic growth will rebound next year as the richest member of the UAE revives delayed projects including a planned branch of the Guggenheim Museum, a senior official said.
The emirate, which sits on 6% of global oil reserves, plans to award contracts to build the museum by the end of this year or early 2017, said Ali Majed al-Mansoori, chairman of the Department of Economic Development. The Guggenheim will be located in the emirate’s cultural hub on Saadiyat island, along with a branch of the Louvre opening late this year and the national Zayed museums, he said in an interview on Sunday.
Like other major oil exporters in the region, Abu Dhabi authorities slashed spending when crude prices plummeted below $30 a barrel. The belt-tightening measures drew the attention of the International Monetary Fund, which said last month that the emirate, home to the world’s second-largest sovereign wealth fund, can afford a more gradual fiscal consolidation.
“The worst is behind us,” said al-Mansoori, who is also a member of the Abu Dhabi Executive Council, the emirate’s top decision-making body. “Our budget is still strong. The majority of projects are still there and there are other smaller projects which are moving. The economy is moving.”
He predicted the economy expanding by as much as 5% in 2017, from about 2% this year. Growth will be bolstered by stronger activity in tourism, infrastructure and transportation, and a plan to double the share of industrial production in the economy to 10%, to be released later this year, he said.
Abu Dhabi cut spending by a fifth in 2015 and plans a further 17% reduction this year, according to the government’s latest bond prospectus. That’s more than a proposed 14% cut in Saudi Arabia, which is facing widening budget deficits and must meet the demands of a much bigger population.
Moody’s Investors Service maintained the emirate’s credit rating in May at Aa2, citing “very large fiscal buffers.” Fiscal consolidation could slow amid pressure to support growth, Moody’s economist Mathias Angonin said last month.
Last year was “a challenge,” al-Mansoori said, resulting in dismissals at several government companies.
Etihad Rail, the developer and operator of the UAE’s $11bn rail network, slashed about 30% of its workforce. Abu Dhabi National Oil Co made 2,000 expatriate employees redundant and plans to cut 3,000 more jobs this year, taking the total to nearly 10% of its staff, the MEED trade magazine reported on May 16, citing industry officials.
Lost jobs will be absorbed by other parts of the economy, including the branch of the Louvre, al-Mansoori said.
“Our workforce is moving from one place to another place,” he said.