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Economy in Qatar to Surge 18 Percent


Qatar : 23 May 2011

Growth will then take a sharp dive for next two years.

The economic growth of Qatar surged by 18.5 percent last year and is forecasted to maintain an 18 percent level of growth for 2011. The two years beyond will see a sharp dip in growth, according to a recent report that puts growth in the single digits for 2012 and 2013.

Increasing oil prices and the booming gas exports for Qatar will result in record surplus amounts in both fiscal reports and the balance of current accounts, even with higher public spending. This was reported by the IIF (or Institute for International Finance) out of Washington.

In a report focusing on the Arab world, the IIF grouped scores from the major western banks and stated that Qatar is protected from negative fallout following unrest in the Arab region.

Despite the 1.8 million people in Qatar, the nation has only a small native population of around 300,000. Over 90 percent of the workforce is expats. The natives have seen enormous benefits from Qatar’s prosperity, according the IIF report.

Real GDP growth for 2010 is estimated to be at 18.5 percent and growth within the real hydrocarbons GDP was 27.9 percent. Non-hydrocarbon GDP is set at 9.2 percent for last year, based on the report sent to local media Emirate 24/7.

For 2011 the growth is forecasted at 18 percent due to continued expansions in the production of natural gas. Beyond the current year growth will slow down drastically, hitting six percent for 2012 and only four percent in 2013. Going forward the hydrocarbon sector should experienced decreasing rates of growth.

Expectations are that Qatar’s external current account and fiscal numbers will maintain surplus figures for 2011, sitting at 26 percent of GDP and 10.6 percent, respectively.

Government revenues in the hydrocarbon sector will rise sharply as a result of increasing oil prices and an anticipated 30 percent rise in LNG exports. The report noted that these increases would be sufficient to offset the massive government spending increases.

Estimates stated that the external debt of Qatar has more than doubled over the last three years, reaching about $104 billion by the end of 2010, an amount equal to 81 percent of the nation’s GDP. That debt total is expected to drop down to 60 percent by the close of 2012.

The IIF stated that a major portion of the external debt for public companies represents the investment requirements for the hydrocarbon industry. With the two surpluses expected to be fairly large, total foreign assets in Qatar are forecasted to increase to almost $186 billion by the close of 2012, up from $133 billion last year.

In regards to the outlook, the major downside risks are still low, but they have the potential to have a considerable impact since the nation’s prosperity is critically dependant on oil and gas production for exports. A drop of more than half or a sudden collapse in LNG prices as a result of technological issues – which is, in itself, unlikely – would result in much lower revenues for hydrocarbons, shifting the fiscal balances and external current account towards major deficits if the government expenditures were situated in a certain way.

A small member of OPEC, Qatar has control of the third largest deposits of gas behind Russia and Iran. Currently, the nation’s proven reserves are estimated at above 25 trillion cubic metres. Many of those are found in the North Field, a gigantic offshore location that straddles almost 6,500 square kilometers over Iranian and Qatari waters.

Qatar has invested over $100 billion in the North Field, tapping those LNG reserves and reaching the top spot as the largest LNG exports in the globe, above Indonesia. By the close of last year the LNG output capacity in Qatar hit 77 million tonnes per year.

Surging LNG exports in Qatar created one of the greatest rates of GDP growth in the world and pushed the nation into a position as one of the richest in the world.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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