Despite economic fluctuations, Abu Dhabi has higher optimism and confidence among consumers and businesses for the second quarter of 2016. UAE and Abu Dhabi continue to deal with impacts of international developments greatly affecting the oil markets. This rise in confidence stems from positive expectations of future economic conditions. The attractiveness of the business environment and investment climate of the Emirate shows an upward trend in various sub-indexes.
The main issue for Abu Dhabi was fluctuating oil prices because that was the bulk of their economy. Diversifying their economy and enhancing the non-oil sectors has helped bolster the economy with the contribution of non-oil activities to Abu Dhabi's GDP at 51.5% in Q2 of 2016. Just like any other country, Abu Dhabi is affected by international, regional and local economic developments especially uncertainties facing economies of countries such as Japan, China, and UK.
Keeping positive outlook is key so that Abu Dhabi can avoid the self fulfilling prophecy.
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It is beneficial that Abu Dhabi was able to diversify their economy and become less dependent on oil prices. Other countries whose economy consists mostly of oil, such as Venezuela, are still struggling with lower prices per barrel.
ReplyDeleteBeing dependent on highly fluctuating factors like oil prices makes the economy highly unstable. Diversification of economy is beneficial as it comprises various factors instead of one factor affecting the whole economy.
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