The economy of Abu Dhabi is largely based upon the revenue generated from natural resources. Petroleum and natural gas play a vital role, although some other sectors are also emerging in order to support the city’s economy due to the global depreciation of fossil fuels.
Abu Dhabi experiences a rapidly growing economy with a high GDP and per capita income. It is not only the wealthiest emirate of the UAE but also qualifies as one of the wealthiest cities in the world. Abu Dhabi’s GDP nearly reached $100 billion in 2006, a huge leap from a mere $40 billion in 2002, and considering it only has a population of around 1.4 million this is quite remarkable. Abu Dhabi’s GDP per capita income also nearly touched the $70,000 mark which is far above the average income of the United Arab Emirates itself and it ranks third in the world after Luxembourg and Norway. This figure is expected to increase further, as long as oil prices continue to perform in favour of oil exporting countries like the UAE and as long as population growth continues to increase at around 5% a year.
The oil sector at the moment supplies most of Abu Dhabi’s GDP, providing over $60,000 million in 2006 and accounting for nearly 60% of it in 2007. Other sectors are slowly growing and in the future Abu Dhabi is expecting non oil sectors such as tourism and property to account for nearly half of its total GDP output.
In order to achieve this target, authorities have re- invested Abu Dhabi’s oil revenues into major projects across the city. The Abu Dhabi Investment Authority (ADIA) is currently estimated at $875 billion, being the world’s wealthiest sovereign fund, in terms of total asset value.
To boost the tourism industry, fancy hotels and entertainment facilities have been constructed all over Abu Dhabi. The latest instalment is a branch of France’s Louvre Museum on the attractive Saadiyat Island. This extraordinary oil exporting island has been transformed into a luxury resort with art centres and shopping malls.
Although most building plans are underway, the latest economic developments in the Western world, the “credit crunch” (2008), have influenced decisions made by foreign investors in the UAE. Due to this, investors have prioritised some of their major projects because money is not as easy to borrow anymore.
Despite this, Abu Dhabi is still in a strong economic position as it has not incurred any direct debt in over a decade. The emirate continues to be the highest contributor to the UAE’S total GDP and carries on providing generous financial subsides to the smaller emirates in the country.