Qatar expects its economic growth will slow to 4.5 per cent in 2013, the weakest rate in a decade, but the tiny Gulf state plans to continue heavy investment in its non-hydrocarbon sector, the state planning authority said.
OPEC member Qatar’s oil and gas-reliant economy has been surging at a break-neck, double-digit pace for the past six years as the country has become the world’s largest exporter of liquefied natural gas, but it is expected to decelerate as the impact of two decades of gas output expansion fades.
The General Secretariat for Development Planning (GSDP) sees inflation-adjusted gross domestic product growth easing to 6.2 per cent in 2012 from 14.0 per cent last year. The weakening global growth outlook and the euro zone debt crisis pose a risk to Qatar as they are affecting oil prices.
“While the (euro) bloc’s problems may seem remote from Qatar, an unexpected weakening of oil prices risks reducing the resources available to the state,” the GSDP said.
Worsening global economy prospects have already knocked crude oil prices down $35 from March highs to around $90 per barrel, near the lowest levels since December 2010.
The International Monetary Fund said in January, after concluding regular consultations with Qatar, that its government had adequate financial cushions to mitigate potential risks.
“4.5 per cent is a bit below our expectations, but is still a fairly healthy number,” said Paul Gamble, head of research at Jadwa Investment in Riyadh.
Qatar, which has avoided the social unrest that rocked the Arab world last year, plans to boost government spending by 27 per cent to $49 billion in the fiscal year that began in April.
It plans to invest about $130 billion in its non-hydrocarbon sector in 2012-2018, the GSDP said. Infrastructure spending should average more than 10 per cent of GDP ahead of the 2022 soccer World Cup.
“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, told a news conference.