Qatar's economic growth has fallen by more than half to a five-year low of 12.5 per cent in the wake of a weakening oil and gas sector, research has found.
Following a period of accelerating expansion, Qatar's economy slowed from a 33.7 per cent growth rate in 2006 to 12.5 per cent last year, its slowest pace since 2003, according to Kuwait-based investment bank Global Investment House.
The growth rate of oil and gas sector declined significantly from 28.6 per cent recorded in 2006 to 9.3 per cent in 2007. At the same time the growth rate of non-oil and gas sector also declined to 16.8 per cent in 2007 as compared to the growth rate of 41.1 per cent in 2006, the bank said in its latest report.
"Qatar's economy is one of the fastest growing economies of the region for the past few years. The country continued its stellar performance in 2007, though at a subdued rate."
The 12.5 per cent growth represented an increase to $63.8 billion (Dh234bn) in 2007 from $56.8bn in the previous year, said Qatar's Statistics Department of the Planning Council.
"Contribution of oil and gas sector declined from 57.3 per cent in 2006 to 55.7 per cent in 2007 and this trend is expected to continue in 2008. Its contribution in 2008 is expected to be 53.5 per cent of GDP," according to the Qatar Economic and Strategic Outlook.
Meanwhile, the contribution of non-oil and gas sector to the GDP increased in 2007 to 44.3 per cent from 42.7 per cent in 2006.
Apart from the oil and gas sector, all other sectors have witnessed increase in their contribution to the GDP in 2007, with the exception of other services. Among the non-oil and gas sectors, the major contributor to the GDP in 2007 was finance, insurance, real estate and business services sector at 11.3 per cent followed by manufacturing at 7.8 per cent.
Global Investment House said Qatar had announced a record budget for the year 2008 to 2009, the largest in the country's history in terms of projected spending, income and surplus.
Total revenue is projected to rise by 42.5 per cent to QR103.3bn ($23.8bn) and expenditure is set to rise by 46 per cent to QR95.9bn from the corresponding figures for 2007 to 2008.
"The budget surplus, however, will rise by 9.6 per cent to QR7.4bn from the previous year. Actual surplus will be higher given the low rates assumed for oil. The budget is based on an oil price assumption of $55 per barrel, which is 37.5 per cent higher than last year's $40 per barrel," the report said.
"Rising oil prices has brought big bounty for Qatar and other GCC countries which has improved the country's public finances."
In 2007, narrow money supply grew by 19.6 per cent to reach QR33.3bn which was backed by 7.4 per cent increase in currency in circulation to QR4.3bn and 21.6 per cent growth registered in demand deposits as it reached QR29.1bn.
Meanwhile, on the back of continuous and robust rise in prices of oil and natural gas, Qatar has been enjoying strong trade surplus over the several years, the investment bank said. "High oil prices throughout 2006 resulted in the exports of the country increase by a robust 32.17 per cent in 2006 to reach QR123.9bn, which was about 53.3 per cent of the country's GDP for the year. However, import bill of the country increased at a faster pace than exports by 63.1 per cent in 2006 to QR59.7bn."
In 2006, the main import items were heavy and light machinery, mechanical appliances, base metals, vehicles, transport equipment and food products.