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UAE Minister of Economy Saeed al Mansouri announced that Abu Dhabi has spent US $ 40 billion but plans to spend a further US $ 1 trillion on developing Abu Dhabi.
The money has been spent on boosting Abu Dhabi’s infrastructure as well as creating and enhancing the emirate’s educational, sporting and manufacturing facilities. Abu Dhabi also plans to build a metro as part of the
Abu Dhabi 2030 plan, as well as power plants and roads. Infrastructure will account for 17.5 per cent of the Dh43.6 billion (US$11.9bn) budget for 2010 announced by the Ministry of Finance last week.
3 November 2009
Analysis and Forecast: decreasing risk
The announcement by the minister of economy about plans to spend US $ 1 trillion on developing Abu Dhabi, will ensure the emirate gradually decouples its economy from reliance on oil reserves.
Although ambitious development plans of neighboring Dubai has led to the collapse of its economy, the situation with Abu Dhabi is different. Firstly, Abu Dhabi is undergoing development at a lower pace than Dubai did.
Secondly, Abu Dhabi has sufficient reserves to undertake such ambitious development plans without having to resort to foreign borrowing. So whilst Dubai was not able to absorb the shock of the global financial crisis, Abu Dhabi has sufficient cushioning to avoid such an eventuality. The combination of these factors will allow Abu Dhabi to gradually diversify its economy away from total reliance on oil and position to become the regional centre for the non-oil sectors.
Abu Dhabi’s image has been boosted by recent successes in media and sporting events and the announcement that it plans to dramatically increase its spending on economic diversification plans is a positive development, particularly given the emirate’s financial ability to undertake such ambitious plans.
The figure below shows current and future plans for the development of the Abu Dhabi economy.
