DUBAI, May 25 (Xinhua) -- Rating agency Moody's Investors Service said on Thursday in a statement it has lifted the rating outlook on the government of Abu Dhabi to "stable" from "negative."
The statement said it raised the outlook because the government of the sheikhdom, a major oil supplier, responded effectively and broadly in relation to policy change amid a lower oil price environment as it accelerated its reform agenda.
In addition, the economy's growth prospects, "supported by a healthy banking system" along with an easing of liability risk, led to the raise of the outlook. Government spending was reduced by 23 percent in the last two years, said the statement.
Moody's said it anticipated that Abu Dhabi's fiscal deficit would be reduced to 2.0 percent in 2017 and 0.3 percent in 2018.
Nevertheless, Moody's said it expects Abu Dhabi's non-oil GDP growth "to slow to 1.9 percent, from 8.6 percent in 2014," reflecting lower government spending and a decline in real estate investment, among other factors.
Real GDP (non-oil plus oil GDP), the agency said, would pick up to 2.2 percent in 2018, due to a rebound in hydrocarbon activity. The price of oil recovered to above 50 U.S. dollars per barrel from almost 25 dollars in January 2016.
