Qatar’s economy is likely to grow 6.3 per cent this year, much faster than previously expected and well ahead of other oil exporting Gulf states, helped by robust domestic demand, a report showed on Tuesday.
Gross domestic product growth in the world’s top exporter of liquefied natural gas is forecast to hit 7.8 per cent in 2015, its fastest rate since 2011, said the report of the Ministry of Development Planning and Statistics. It was 6.5 per cent in 2013.
“Although receding hydrocarbon output is seen checking overall growth in 2014, with the commissioning of the Barzan gas project in 2015 a step increase in gas output is expected, taking aggregate growth higher,” the ministry said.
By comparison, Qatar’s fastest growing neighbour, the United Arab Emirates, is expected to expand by 4.3 per cent this year.
Qatar had previously forecast 2014 growth of 4.6 per cent, citing reduced output from maturing oil fields.
The OPEC member’s fiscal surplus is forecast to narrow to 9.3 per cent of GDP in calendar 2014 and to 5.5 per cent in 2015 from an estimated 12.9 per cent in 2013, as the government’s large investment programme gathers pace ahead of hosting the 2022 World Cup soccer tournament.
In the 2013/14 fiscal year, which ended in March, the government’s overall surplus was estimated at QAR94.6 billion ($25.98 billion), equivalent to 12.6 per cent of GDP and up from 11.2 per cent in the previous year, the report said.
“Most of the increase came from the transfer of QP’s (Qatar Petroleum) entire financial surplus to the government,” it said.
Qatar Petroleum started transferring its entire financial surplus to the government from 2013. Previously, a part went to the government as investment income, part was retained on the company’s balance sheet and another was used to provide fresh capital to the Qatar Investment Authority.
The price of oil Qatar needs to balance its budget is forecast to rise to $52.9 per barrel in 2014 and $67.7 in 2015 from $42.3 last year under the baseline scenario, the ministry said, below current levels of $114 for the Brent crude.
Total budget spending fell one per cent in 2013/14, the first decline in a decade, as a 2.4 per cent rise in capital spending was outweighed by a 2.1 per cent drop in the current expenditure.
Qatar, which pegs its riyal currency to the U.S. dollar, plans to spend some $210 billion on infrastructure, including roads and stadiums ahead of the World Cup.
Inflation is expected to average three per cent in 2014, less than 3.5 per cent seen in December, and edge up to 3.4 per cent in 2015 with strengthening domestic demand.
“Risks of accelerating inflation seem contained at the moment, but consumer price pressures would pick up if imported inflation gathered pace,” the report said.
Analysts polled by Reuters in April forecast Qatar’s GDP would grow 6.1 per cent in 2014 and six per cent in 2015, and inflation would reach 3.6 per cent and four per cent, respectively.