Abu Dhabi per capita income substantially higher than its peers: Moody's

Abu Dhabi's budget deficit to increase to 6.3 per cent of GDP in 2020, narrowing to 5.1 per cent of GDP in 2021. - Reuters

Abu Dhabi's per capita income is substantially higher than its sovereign peers including the GCC countries, according to Moody's Investors Service.
The UAE capital boasts per capita income of $153,682 (Dh564,000) as compared to $64,199 (Dh235,600) for Hong Kong, $74,357 for Norway, $55,730 for Saudi Arabia, $53,651 for Sweden and $66,652 for Kuwait.
With an estimated nominal GDP of $244 billion as of 2019, Abu Dhabi makes up about 60 per cent of the UAE economy and is bigger than both Qatar and Kuwait, said Thaddeus Best, an analyst at Moody's Investors Service.
However, the rating agency warned that its oil income will shrink 30 per cent this year in the wake of crash in crude prices and outbreak of coronavirus.
Moody's estimated Abu Dhabi ran a modest budget deficit of 0.3 per cent of GDP in 2019, a significant reversal from the 6.4 per cent deficit of 2016, due to increasing oil prices.
"Our baseline oil price forecast of $35 a barrel in 2020 and $45 per barrel in 2021 imply oil revenues will be 30 per cent and 19 per cent below estimated 2019 levels, respectively. Nonetheless, we understand that the government is planning to implement cuts to aid payments, grants and other transfers, in order to reduce the impact on the overall deficit," he said in annual credit analysis report.
It forecast Abu Dhabi's budget deficit to increase to 6.3 per cent of GDP in 2020, narrowing to 5.1 per cent of GDP in 2021

Strong governance level
The UAE capital also compares favourably to its direct peers in terms of economic strength, primarily due to one of the highest wealth levels in our rated universe and a high level of competitiveness. The emirate benefits from a relatively effective institutional framework, supported by strong fiscal policy effectiveness and a strong and credible currency peg managed by the central bank of the UAE.
Abu Dhabi's fiscal strength is supported by its very low debt level and large accumulated sovereign reserves.
The ratings agency also noted that control of corruption and rule of law have been improving over the last decade and is far better than regional sovereigns, with the UAE ranking in the top decile globally. Worldwide Governance Indicators for rule of law and control of corruption have been trending upward since 2010, albeit at a slower pace, it added.
- waheedabbas@khaleejtimes.com