Abu Dhabi is well-positioned to handle shortfall in hydrocarbons revenues

Source: OBG.

Aided by hydrocarbons reserves that are among the world’s largest and substantial financial resources, Abu Dhabi has built up a strong foundation to become a regional leader and an increasingly important global player in a wide variety of sectors, including oil and gas, financial services, health care, aviation and renewable energy, says the Oxford Business Group (OBG) in an online introduction to The Report: Abu Dhabi 2016. However, a sustained focus on economic diversification and targeted investment in Abu Dhabi’s key non-oil sectors in recent years means the emirate is well positioned to weather the storm.

Subdued oil prices prompted a trimmed federal budget for 2016 as the UAE, like other countries in the region, tightened its belt in response to falling hydrocarbons revenues, the OBG notes. Plans for future development are mapped out in Abu Dhabi Economic Vision 2030, a comprehensive economic policy document that aims to reduce dependence on oil and gas, thereby creating a more sustainable knowledge-based economy.

The report includes a chapter on Islamic financial services. The sector has entered 2016 ready to weather the economic challenges presented by a subdued oil price and is well positioned to pursue growth where opportunities arise in the coming years, says the OBG.

"With total assets estimated at US$127 billion in 2014, the UAE has one of the largest shari'ah-compliant banking sectors in the world – the third-largest after Saudi Arabia and Malaysia," noted the consultancy in an online introduction to the chapter.

The OBG notes that beyond dedicated Islamic banks, the majority of the UAE’s 23 licensed lenders and many of the 26 foreign banks in the country have shari'ah-compliant services. "Moving forward, Islamic lenders can expect to benefit from domestic economic activity, including the projects attached to Dubai Expo 2020 and the opening up of Iran to increased trade and investment activity," the OBG further stated.

The chapter contains an interview with Tirad Al Mahmoud, CEO, Abu Dhabi Islamic Bank.

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