Qatar Increases 2013 GDP Growth Forecast To 4.8%
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Qatar Increases 2013 GDP Growth Forecast To 4.8%

Qatar Increases 2013 GDP Growth Forecast To 4.8%

The Gulf state had predicted a GDP growth rate of 4.5 per cent for 2013 in June.

Gulf Business

Qatar raised its forecast for economic growth next year and said that while prices would rise considerably as huge infrastructure-building plans gained speed, it could contain inflation.

Gross domestic product, adjusted for inflation, is now forecast to expand 4.8 per cent in 2013 instead of the 4.5 per cent which authorities predicted in June, the General Secretariat for Development Planning said on Sunday.

That growth rate, down from an estimated 6.3 per cent in 2012, would be Qatar’s lowest since 2002, according to International Monetary Fund data.

A period of heavy investment in Qatar’s oil and gas resources has ended, meaning it will move closer to the growth rates of other Gulf Arab energy exporters, the planning authority said in a statement.

But oil and gas output next year is likely to decline less than originally thought, by 0.2 per cent instead of 1.2 per cent, largely because of more crude oil production. Infrastructure building will also accelerate, taking construction sector growth to a double-digit rate, the authority said.

Qatar plans to spend tens of billions of dollars by 2020 on railways, roads, utilities and facilities to host the 2022 soccer World Cup, but partly because of bureaucratic obstacles, projects have started more slowly than businessmen had hoped.

The authority predicts Qatar’s state budget spending next year will climb 9.5 per cent to QAR255.8 billion ($70.3 billion); within that, capital spending would rise 10.4 per cent to QAR85.9 billion.

Although Qatar is vulnerable to any downturn in oil prices, the authority calculated the price of crude oil, now above $100 a barrel, would have to drop below $50 to shift its budget surplus into a deficit next year.

It saw the main economic risk as geopolitical, an apparent reference to Iran’s threats to close the Strait of Hormuz in the event of conflict over its disputed nuclear programme.

“Should geopolitics develop in a way that disrupts the free flow of gas and oil, the financial resources available to the state will be affected,” the authority said, adding that in this case Qatar could mobilise its reserves. Analysts estimate its sovereign wealth fund has over $100 billion of assets.


While the infrastructure building scheme will keep Qatar’s economy growing, companies and workers pouring into the country to handle the projects are likely to push up residential rents.

The authority now expects consumer price inflation to rise to 3.5 per cent in 2013 from two per cent this year; in June, it had predicted 2013 inflation of only 2.5 per cent.

The rental component of the consumer price index bottomed out in April-May this year and by August rents had climbed above their year-ago level, adding about 0.5 percentage point to inflation this year, the authority said.

It said officials could use a combination of regulation and action by the central bank, which has been issuing Treasury bills to absorb excess funds in the money market, to avert overheating. “Inflation remains mild and is unlikely to present a threat to macroeconomic stability,” it said.

“The authorities will continue to deploy their regulatory powers to prevent traders imposing unjustified hikes on consumer prices. The central bank has been vigilant in managing credit growth and has a full armoury of effective tools.”

An earlier explosion of bank loans to the real estate sector led some analysts to fear a bubble, but the authority said year-on-year growth in commercial banks’ credit to private construction and real estate firms had dropped to 8.3 per cent in October from above 40 percent around the end of last year.


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