Sluggish hydrocarbon sector is expected to considerably slow down Qatar’s real economy to 4.5% in 2013 from a projected 6.2% this year, even as its fiscal surplus will be robust to ride out any turbulence, according to the General Secretariat for Development Planning (GSDP).
Although upstream oil and gas production is expected to plateau at 2.9%, the country’s non-oil sector is poised for a robust 9.2% growth this year, paced by manufacturing and construction sectors, said GSDP in its second edition of Qatar Economic Outlook 2012-13.
The country’s nominal GDP (gross domestic product) is expected to grow by 4.7% in 2013 from a projected 11.2% this year, while inflation is slated to be 2% in 2012 and 2.5% next year. The weakening global growth outlook and the eurozone debt crisis pose a risk to Qatar as they affect oil prices.
“The Qatar Economic Outlook sees strong momentum coming from expansion of manufacturing, construction and services. The share of oil and gas production in aggregate output will, as earlier expected, now begin to recede,” GSDP secretary general Saleh al-Nabit said, releasing the report.
Asserting that non-hydrocarbon growth of 9.2% as “close to full potential”, GSDP said manufacturing growth was expected to be around 10% but constraints on feedstock put limits on downstream expansion.
Infrastructure spending is expected to average to more than 10% of GDP in future years, it said, adding construction sector output would grow by a similar proportion.
“We anticipate robust activity in the construction sector, primed by Qatar’s infrastructure spending plans. This is likely to peak around 2015, so we are still very much in the development phase,” Frank Harrigan, director of the GSDP’s Economic Development Department, said.
Highlighting that the outlook for consumer price inflation in 2012 and 2013 was comparatively “benign”, GSDP said its core inflation measure decelerated sharply than the headline rate, suggesting that the underlying inflationary pressures were “mild”.
“Excess supply in the residential rental market looks set to continue and - in a context of anaemic global demand - non-fuel global commodity prices seem unlikely to stoke imported inflation,” according to the report.
“The outlook for rental price inflation, which has a 32% weight in the CPI, is weak, given the substantial supply overhang,” it said, adding inflationary pressures coming from abroad were also expected to be weak mainly on soft commodity prices and a stable outlook for the US dollar.
About fiscal and balance-of-payments outlook, it said the country’s overall fiscal position would remain robust but surplus was expected to shrink to 7.8% of GDP and then further to 4.8% in 2013.
The expected narrowing (of fiscal surplus) stems both from slower growth of revenue and faster growth of government expenditure. The non-hydrocarbon fiscal balance will remain in deficit, it said, adding tax revenue is forecast to grow in line with the trend of the non-hydrocarbon sector.
On the country’s current account surplus, which is slated to be 22% and 20.6% in 2012 and 2013 respectively, GSDP said that higher investment spending during the period would create considerable demand for imported capital and materials in circumstances where declining hydrocarbon production would weigh on export revenue growth.