Qatar economic growth to slow in 2012
Doha , February 8, 2012
The economic growth in Qatar will slow to 9.8 per cent in 2012 as a result of the final completion of liquefied natural gas (LNG) expansion and associated gas to liquids (GTLs) projects, according to a report by International Bank of Qatar (IBQ).
The growth in gas production itself is projected to slow to 7 per cent in 2012, while oil output is forecast to remain stable over the coming two years at 0.8 million barrels per day, the IBQ said in its GCC economic brief.
According to IBQ, Qatari economy had registered another year of rapid growth in 2011 driven by further expansion in liquefied natural gas (LNG) production, elevated oil prices and increasing output in the non-oil sector.
LNG production, upon which so much of Qatar’s fast growth was predicted over the last decade, reached its maximum capacity of 77 million tonnes per year in 2011, and, in view of the moratorium on new hydrocarbon projects in the North Field until 2015, is likely to have therefore reached its peak in 2011, it stated.
Qatar, the report said, was also making headway, however, in utilizing and marketing associated products including GTLs and natural gas liquids (NGL) projects as well as downstream processes such as petrochemicals and fertilizers.
According to IBQ, a concerted effort is being undertaken by the country to diversify and develop the non-oil sector, as articulated in the National Development Strategy 2011-2016 and the broader Qatar National Vision 2030.
Spearheaded by spending in excess of $125 billion over five years, $65 billion of which will be directly funded by the government, infrastructure investment (including World Cup 2022 development spending) and manufacturing will drive non-oil sector growth alongside financial services, trade and tourism, the report stated.
On the inflation scenario, IBQ said following on from the deflation of 2009 and 2010, Qatar’s consumer price index in 2011 has continued to be affected by falling rental prices (which comprise 32 per cent of the CPI) despite signs that downward pressures were easing.
Given that excess capacity in the real estate sector will only gradually be unwound, depressed rental prices will persist in 2012 and temper demand-driven inflationary impulses that are on the rise as a result of the country’s rapid growth and accommodative fiscal and monetary policies, the IBQ said in the report.
IBQ said the recent 60 per cent hike in the salaries of Qatari nationals was not expected to contribute to inflation significantly. 'Therefore we expect inflation to average 1.9 per cent in 2011 and 2 per cent in 2012.'
Qatar is forecast to record fiscal surpluses in both 2011 and 2012, at 3.7 per cent and 1.9 per cent of GDP, respectively, as a result of high oil prices and maximum annual LNG production, the report stated.
A slowdown in hydrocarbon revenue growth coupled with increasing public sector spending - including capital expenditures and wages - will make a greater impact on the central government balance in 2012 than in previous years, said the IBQ report.
Meanwhile, strong export revenues are expected to translate into sizeable current account surpluses in both 2011 and going forward in 2012, it added.-TradeArabia News Service