Abu Dhabi's real GDP growth accelerated to 9.3% in 2022 but is expected to be broadly flat in 2023 due to the OPEC+ agreement to cut oil production, S&P Global Ratings said in a new report.
"We estimate economic growth will be broadly flat in 2023, with nonhydrocarbon sector growth of about 4%, partly due to tighter monetary policy conditions," Trevor Cullinan and other analysts said in the report.
The sector will expand at a similar rate over the period to 2026. Activity in the hydrocarbon sector will decline about 5% in 2023 due to the OPEC+ production cuts, but average about 3.5% growth
over 2024-2026. "Taking both sectors into account, we expect GDP growth of about 4% over the same period."
The agency expects Abu Dhabi's oil production to increase over the medium term as OPEC+ quotas are lifted and capacity increases to 5 million barrels per day (bpd) by 2027 from about 4 million bpd, in line with state-owned oil producer, refiner, and distributor Abu Dhabi National Oil Co.'s (ADNOC) strategy.
"Notwithstanding this assumption, we expect oil production to fall to about 2.9 million bpd on average in 2023 based on the October 2022 OPEC+ announcement, following an average of 3.07 million bpd in 2022. We expect oil production to rise again in 2024 (3.05 million bpd) and 2025 (3.15 million bpd), although given the capacity expansion plans, there is upside to these production levels," S&P said.
(Writing by Brinda Darasha; editing by Seban Scaria)