Qatar's non-hydrocarbon sector fuels 2015 economy
Despite the recent decline in oil prices, Qatar's economy is set to grow in 2015 by a healthy 7.7%
Despite the ongoing pressure on oil prices, Qatar’s economy is expected to grow in 2015, by a healthy 7.7%.
Driven by the non-hydrocarbon sector, the predicted growth rate in 2015 would be Qatar's fastest expansion since 2011 and an acceleration from 6.3% estimated for this year, reported Zawya.
An update of ‘Qatar Economic Outlook 2014-16’ released by the Ministry of Development Planning and Statistics (MDP&S) noted little change is expected in 2016, with growth of 7.5%.
This bodes well for the country’s aim to become sustainable, in line with the National Vision 2030. The Minister of MDP&S, H E Dr Saleh Al Nabit, said: “In 2015, with momentum still gathering in non-hydrocarbons, the sector’s share of GDP will overtake that of oil and gas, and continue rising in 2016 and beyond.
"This diversification of output and the broadening of the economic base is very welcome. However, to support long-term deepening of the economic base, more needs to be done to boost private sector participation in the economy and the upgrading of skills, technology and productivity.”
Inflation is forecast to remain unchanged from June, which is predicted to average at 3%. Only marginal increases over this number are seen thereafter, with inflation inching up to 3.5% in 2015 and to 3.7% in 2016.
As local demand strengthens, domestic sources of inflationary pressures are expected to build over the projection period, Zawya reports. The vigorous growth of local demand will push prices up of non-tradable goods and services, including rentals, especially in affordable housing for the low- to middle-income segment of the market where availability is usually tighter.
However, the fiscal surplus is predicted to remain robust in 2014, at nearly 13% of GDP, though down a little on 2013’s outcome, and is set to narrow further over the rest of the period.
The strong boost to the fiscal surplus that larger investment income transferred from Qatar Petroleum (QP) in 2013 and 2014 is set to moderate gradually over the rest of the outlook period. This slowing stimulus is expected as hydrocarbon receipts continue declining and as QP spending picks up over 2015-2016, with investments in recovery of oil from maturing fields.
Despite the steep decline in oil prices seen in recent months that will affect fiscal revenues, Qatar still has a substantial fiscal buffer that will help cushion the domestic economy from potential adverse fall-out. Against this, however, Qatar's ‘break-even’ oil price is expected to rise in 2015 and 2016, and the buffer could narrow.
“A variety of initiatives now underway at the Ministry of Finance, which will promote a forward-looking approach to fiscal management and improved planning and running of the state's capital programme, will help shield Qatar against oil price shocks in the years ahead,” said Saleh.
In the first half of 2014, exports, dominated by hydrocarbons, were the single largest component of demand, accounting for 73.3% of GDP. Investment contributed 29.1%, household consumption 14.1% and government consumption of final goods and services 13.9%. Imports, an outflow from demand in the domestic economy, amounted to 30.5% of GDP. Qatar’s saving rate tracked up by 2.3% points, reaching 59.5% of nominal GDP.
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