Qatar’s economy is expected to grow at an accelerated pace next year which shows the proactive steps taken by the government are steering the country in the right direction.
QNB noted in its weekly economic commentary that Qatar’s Gross Domestic Product (GDP) growth is expected to grow by 2.6 percent in 2018 as the drag from the hydrocarbon sector abates and the non-hydrocarbon sector is supported by construction, agriculture, manufacturing, transportation and storage. Higher oil prices will allow for some positive multiplier effects on domestic demand and also support current account surpluses.
The economy had grown by 1.6 percent in 2017 braving an unjust blockade imposed on Qatar by some neighbouring countries.
QNB has revised up its oil price forecasts to $72 per barrel in 2018 and $69 per barrel in 2019. Strong global demand and various supply disruptions will keep prices firm well into 2019 before slowing global GDP growth and continued increases in US shale supply damp prices somewhat.
On the hydrocarbon side of Qatar’s real economy, a growth of 0.2 percent is anticipated, which would end four years of declines. The lifting of OPEC production cuts should modestly boost crude oil production, while the end of maintenance work and temporary shutdowns should start to spur a recovery in LNG output through the year. A further pick up of 0.7 percent in hydrocarbon output is then expected in 2019.
A report released by Institute of International Finance (IIF), released last week, noted that a strong rebound in capital inflows to Qatar was the key driver to the overall rise in the non-resident capital flows to a ‘group of 26 countries’ in 2018, estimated at $145bn, up from about $125bn in 2017.
This amounts to over 5 percent of the Frontier Market (FM) GDP—higher than the three - four percent seen for larger Emerging Market. The upturn is due mainly to a strong rebound in flows to Qatar, from outflows of $23bn in 2017 to some $20bn this year, said the report.
According to the QNB report, the total non-hydrocarbon GDP growth was a robust 4.9 percent year-on-year in Q1, 2018, starting the year on a strong footing. Non-hydrocarbon GDP is expected to gain by 5 percent in 2018. For 2019 as a whole, QNB forecasts non-hydrocarbon GDP growth of 5.3 percent.
Accounting for 21 percent of non-hydrocarbon output, construction activity was up 17.5 percent in 2017, supported by key infrastructure projects related to Qatar’s Vision 2030 and also the 2022 World Cup. The construction sector’s buoyancy has continued so far in 2018 with the latest data showing output up 17.2 percent year-on-year in the first quarter.
All indicators suggest that Qatar is set to emerge as an economic power house.
