Qatar growth to spike 'before sharp fall in 2012'

Qatar's economy is projected to extend a rapid expansion it has recorded over the past few years into 2010 and 2011 but growth could sharply slow down after 2012 when most gas projects are completed, a Saudi bank said yesterday.

Mega LNG projects to tap the world's largest gas field catapulted the Gulf country's real GDP by an average 18 per cent annually during 2004-2009 and growth is expected to remain high during 2010 and 2011, the Saudi American Bank Group (Samba) said in a study.

"As the bulk of these projects will be completed by 2012 questions are being raised as to where longer-term growth will come from. This question is not unique to Qatar, but touches on the diversification challenges faced by all hydrocarbons-based GCC economies," Samba said.

"While the extraordinary annual real economic growth rates of recent years (averaging 18 per cent during 2004-2009 and projected at 17.7 per cent this year and 13.3 per cent in 2011) are unlikely to be repeated, prospects for growth averaging around four per cent post 2012 appear promising."

But the report noted that a surge in Qatar's revenue due to the sharp rise in LNG exports would allow it to push ahead with major projects within its ongoing economic diversification strategy.

It said the strategy is increasingly focused on infrastructure and human development with the aim of facilitating the expansion of its transport and services sector, including finance, tourism and health. "Emphasis is being firmly placed on establishing a well regulated and liberal business climate within a stable macroeconomic environment," it said.

"Over the next three-five years, the pursuit of this diversification agenda will generate strong growth momentum as large scale infrastructure projects are implemented – such as the Doha airport and port, Qatar-Bahrain causeway, and integrated rail networks. However, as in other GCC states, challenges certainly exist."

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