9.30 PM Thursday, 28 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:57 06:11 12:27 15:53 18:37 19:51
28 March 2024

Qatari economy to lose steam in 2012

Published
By Staff

Qatar appears to be heading for an end of its economic euphoria as growth in its GDP is projected to dip to only around six per cent in 2012 from an expected 19 per cent in 2011 and similar high rates in previous years.

IMF figures showed the Gulf country’s real GDP, which has recorded one of the world’s highest growth rates over the past decade, leaped by nearly 17 per cent in 2010 and is forecast to pick up by about 19 per cent in 2011.

The report expected GDP growth in the world’s third largest gas power to dive to nearly six per cent in 2012 but gave no reason the sharp fall apart from saying Qatar is still enforcing a moratorium on gas development projects.

Analysts attributed it to relative stability in the country’s LNG supply growth following the completion of mammoth projects to boost output to 77 million tonnes per year. The country’s LNG exports had grown by at least 15 per cent annually over the past 10 years before stabilizing at the peak 77 million tonne level at the end of 2010, when the projects were completed.

The sharp expansion in Qatar’s gas industry has catapulted its economy and turned it into one of the richest nations on earth before becoming the wealthiest in terms of GDP per capita income in 2010.

Qatar’s GDP shot up by nearly 26.8 per cent in 2007 and 25.4 per cent in 2008 before growth tumbled to only 8.7 per cent in 2009 following a sharp drop in oil prices in the wake of the 2008 global fiscal distress.

But growth in 2009 is considered high compared with that recorded in other parts of the world, where it dipped to near zero or recorded negative growth.

“Real GDP growth in 2011 is projected to accelerate to 19 per cent, up from 17 per cent in 2010. The non-hydrocarbon sector is expected to grow by nine per cent driven by manufacturing, financial services, and trade and hotels,” the Washington-based IMF said in its Article IV Consultation Concluding Statement of the IMF mission to the world’s dominant LNG exporter.

The report showed hydrocarbon sector growth would peak from an increase in its production capacity of liquefied natural gas (LNG) to 77 million.

Turning to finance, it said the country’s overall fiscal balance remained in surplus of 2.7 per cent of GDP in 2010/2011, despite the sharp rise in current expenditure and lower than budgeted transfer of investment income from public enterprises. The current account balance is projected to record a surplus of 28 per cent of GDP in 2011, up from 26 per cent in 2010, reflecting increased exports of LNG and condensates, and higher oil and gas prices.

“The economic outlook for 2012 remains positive, despite increased external risks. Real GDP growth rate is projected to moderate to six per cent in 2012. While real hydrocarbon GDP will slow down to less than three per cent due to the country’s self imposed moratorium on development of new hydrocarbon projects until 2015, large infrastructure investment and increased production in the manufacturing sector will boost growth in real non-hydrocarbon GDP, which will accelerate to nine per cent,” it said.

“The post-budget announcement of salary and pension hikes would add an estimated $1.6 billion to expenditure in 2011/2012, but the actual fiscal balance is still projected to record a surplus of over seven percent in .…the external balance is projected to post a surplus of $47 billion.”

In the medium term, the outlook for Qatar remains positive since most of its exports have already been tied up in long-term contracts, the IMF said.

It said the fiscal and external current account balances are expected to continue to record surpluses, as hydrocarbon prices are forecast to remain high. Continued government investment will keep growth in the non-hydrocarbon sector at 9-10 per cent beyond 2011.

“The principal risks ahead are lower oil and gas prices as a result of a decline in global demand, disruption in transportation of LNG due to increased geopolitical tensions, but the Government has adequate financial cushions and a policy framework in place that would mitigate potential risks.”

Qatar launched LNG projects in early 1990s to tap the massive gas wealth of the 6,000-square-km offshore North Field, estimated at around 25 trillion cubic metres, nearly 15 per cent of the world’s total gas deposits.

The country, a member of the 12-nation OPEC, became the largest LNG supplier in the world when it pumped around 40 million tonnes in 2009. Production capacity is now estimated at 77 million tonnes per year.