Qatar’s economic growth is expected to slow to 4.5 per cent in 2013, the weakest rate in a decade, but the country plans to continue heavy investment in its non-hydrocarbon sector, the OPEC member’s planning authority said on Monday.
Qatar’s oil and gas-reliant economy has been surging at a break-neck, double-digit pace for the past six years 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 per cent last year. Large growth risks exist in the global economy, particularly in the debt-ridden euro zone.
“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 current around $90 per barrel, near lowest levels since December 2010.
The International Monetary Fund said in January after concluding regular consultations with Qatar, its government had adequate financial cushions to mitigate potential risks.
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.
The world’s top exporter of liquefied natural gas 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.
In September, Qatar raised basic salaries and social benefits for state civilian employees by 60 per cent, while military staff received 50-120 per cent increases.
Despite increased spending, the Gulf Arab country’s government budget should show a comfortable surplus of 7.8 per cent of GDP in the 2012 calendar year, although GSDP forecasts it to fall to 4.8 per cent in 2013.
Inflation in Qatar, which pegs its riyal to the US dollar, should edge higher and float between two and three per cent in 2012 and 2013, the GSDP said.
It has been hovering just above one per cent since the start of 2012 due to weakness in the property sector.
“Inflationary pressures are expected to remain tame in 2012 and 2013,” the GSDP said.
“Excess supply in the residential rental market looks set to continue and – in a context of anemic global demand – non-fuel global commodity prices seem unlikely to stoke imported inflation,” it said.