* Previous forecast was 4.5-5 pct for 2012
* Growth should accelerate to 5.7 pct on average in
2013-2016
* Spending redirected to social projects
(Adds quotes, details, background)
ABU DHABI, Sept 24 (Reuters) - Abu Dhabi's economy is likely
to grow 3.9 percent this year, lagging previous forecasts, but
should pick up in the next few years helped by further
diversification away from oil, the Department of Economic
Development said on Monday.
A drop in oil production this year is expected to curb
economic growth in Abu Dhabi, the largest of the seven members
of the United Arab Emirates. The department, in an inaugural
report on Abu Dhabi's development outlook, said the government
should keep spending to support growth although it said the
focus of spending was shifting to social projects.
Abu Dhabi accounts for 65 percent of UAE economic output and
almost all of its oil production.
The department forecast economic growth would accelerate to
average 5.7 percent annually in 2013-2016.
Non-oil gross domestic product would rise 5.5 percent this
year, accelerating to an average of 6.5 percent in the 2013-2016
period on a projected increase in private sector investment.
"The non-oil sector will be the prime driver (of growth from
2012 onwards) with investments in industry, tourism,
infrastructure and others. The oil sector will also contribute
to the GDP," Mohamed Omar Abdulla, undersecretary at the
department, told reporters.
"With the diversification going on, the contribution of the
non-oil sector should be greater than oil," he said, without
saying when non-oil output would overtake the oil sector.
Abu Dhabi does not regularly release inflation-adjusted GDP
data, but Abdulla estimated last October that the emirate's
economy would expand about 4.5 percent in 2011 and 4.5-5 percent
in 2012.
"Spending has been directed to very important areas like
education, health and infrastructure, so mainly these three
areas," Abdulla told a news conference on the report.
He did not say what level of government expenditure - a key
driver of the emirate's economic growth - was projected for
2012.
The UAE has not been hit by the social unrest seen elsewhere
in the Middle East in the past year, but it has raised public
spending to avert tensions. It has a cradle-to-grave welfare
system and its per capita income of $48,200 is one of the
highest in the world.
Government spending in Abu Dhabi jumped 21 percent last year
to an estimated 314.7 billion dirhams ($86 billion), while
revenues shot up 46 percent to 280.9 billion, a report by the
International Monetary Fund based on government figures showed
in June.
The coastal desert emirate of some 2 million people, which
accounts for around 78 percent of overall spending in the UAE
and is home to one of the world's largest sovereign wealth
funds, does not publish its yearly budget plans and outcomes.
Analysts polled by Reuters in July forecast economic
expansion in the UAE, the world's No. 3 oil exporter, to slow to
3.2 percent in 2012 from 4.2 percent last year due to the impact
of weak global growth and lower oil production that was boosted
in 2011 due to a civil war in Libya.
($1 = 3.673 UAE dirhams)
(Reporting by Stanley Carvalho and Martin Dokoupil; Writing by
Martin Dokoupil; Editing by Susan Fenton)