Qatar's economy will continue its strong performance in the coming years despite the declining growth in the gross domestic product (GDP) as a result of the receding hydrocarbon production rates, which was a powerful stimulus for the GDP growth in the past years, an official economic report has confirmed.
The "Qatar Economic Outlook 2012 2013", issued by the General Secretariat for Development Planning (GSDP) recently, forecasted robust growth of real gross domestic product (GDP) of 6.2% in 2012. The QEO also anticipated that real GDP growth will moderate to 4.5% in 2013, noting that the continued growth in the coming years will remain supported by growth in non-hydrocarbon sectors, especially the manufacturing and petrochemical industries and the construction sector.
According to the QEO, non-oil and gas sector including construction, manufacturing and services will lead the growth in Qatar's economy by 9.2 percent growth. It predicted 10 percent growth in the manufacturing sector and the infrastructure sector spending alone will average 10 percent of the GDP. Meanwhile, the construction, in particular, will grow at a average of 10 percent within the next two years, backed by a network of infrastructure investments.
Despite the QEO expectations of the declining GDP, whether real or nominal, during the years 2012 and 2013, it spotted at the same time several indicators that reflect the strong performance of the economy in general, most notably, the continued achievement of a surplus in the current account of balance of payments at the rate of double digit.
It said that Qatar s external surpluses on the current account of the balance of payments will stay in double digits. In 2012, the surplus is expected to be 19.9% of nominal GDP, edging down to 16.6% in 2013.
What enhances the growth opportunities in Qatar is expectations of the continued high oil prices, which will support the power of external payments and the budget during these two years, despite large increases in current expenditure and investment plans of the State, the report noted.
According to the QEO report, Qatar will again post a sizeable fiscal surplus in 2012, despite large, planned increases in recurrent outlays on wages, salaries and pensions, as well as greater capital spending. A surplus of 7.8% of nominal GDP is expected in 2012. The fiscal surplus in 2013 is predicted to come down to 4.8% as hydrocarbon income stabilizes and spending continues growing, along with the economy and population.
The budget for the Fiscal Year 2012/13 substantial increase in spending, 28% over the FY 2011/12 budgeted figure. Programmed spending on major capital projects is to account for about 25% of total expenditure, rising by over 30% against actual outlays in FY 2011/12.
Between 2012 and 2019, Qatar has planned infrastructure investments in the region of $150 billion. In the near term 2012 and 013 it may well spend some 10% of its GDP on infrastructure and total project disbursements, or about $35 billion, according to the report.
The Qatari economy transformation from relying on the hydrocarbon sector to the non-oil sectors reflects another aspect of the strength of the economy performance. Although this may cause a drop in the rates of GDP growth, it means that the Qatari economy will vary its incomes and will not dependent on a particular sector, which will enable it to better cope with changes in the international economic arena.
Secretary General of GSDP Dr. Saleh Al Nabit said in a statement to Qatar News Agency (QNA) that most prominent manifestations of the strength of the Qatari economy performance despite the expected decline in the nominal and real GDP growth during the next two years is the improvement in a number of areas, especially the various efforts to upgrade the performance of the private sector, in addition to the rapid growth of non-oil exports though it is still limited.
Dr. Al Nabit added that the Qatar Economic Outlook 2012-2013 indicated that the non-oil sectors that will drive the GDP growth in the state, mainly the construction sector which will have a significant role, especially with the start of implementation of infrastructure projects.
Dr. Nabil said in press statement recently that the State of Qatar is keen to keen to diversify its economy, as the economy's dependence on oil revenues will decline gradually in the future to become a knowledge-based economy.
Concerning inflation, the QEO forecasts showed a modest pick-up over the rest of 2012, but range bound, with the outcome for 2012 likely to be unchanged from 2011 at close to 2%. With prospects of weaker commodity prices and a firmer US dollar, headline inflation is forecast to stay tame in 2013 but could edge up to 2.5%.
The report showed that the credit growth continued to accelerate in the first months of 2012, expanding by 35.3% in the year through to
April 2012. Credit to the the corporate sector jumped by 80.4%. Broad money supply (M2) increased by 12.1% year on year until end-March.