UAE - Mubasher: Abu Dhabi's gross domestic product (GDP) is expected to retreat by 7.5% in 2020 due to lower oil prices and the coronavirus (COVID-19) pandemic, according to S&P Global Ratings.

The rating agency referred that the oil production of Abu Dhabi, which generates 90% of its income, would decrease to an average of 2.8 million barrels per day (bpd) in 2020 from 3.1 million bpd in 2019.

In line with its commitment to OPEC+ agreement to cut oil supply by 9.7 million bpd in May and June, the emirate will reduce output by further 100,000 bpd in June.

The emirate's fiscal deficit is also expected to increase to 12% of GDP in 2020, compared to 0.3% in 2019.

However, S&P forecasts that Abu Dhabi's economy will recover with an average growth rate of 2.2% between 2021 and 2023, as its financial assets will offset the decline in oil prices and the impact of COVID-19.

"The exceptional strength of the government's net asset position provides a buffer to counteract the effect of oil price swings and COVID-19 on economic growth, government revenue, and the external account, as well as the effect of increasing geopolitical uncertainty in the Gulf region," S&P Global Ratings referred.