Qatar’s public spending may rise 'modestly' this year after flatlining in 2023: Oxford Economics

Qatar’s public spending is expected to rise modestly this year after flatlining in 2023, according to Oxford Economics.The researcher’s baseline shows a budget surplus of QR36.1bn this year, equivalent to 4.5% of GDP."This is down from an estimated 6.3% in 2023 but a better outcome that what is pencilled into Qatar's 2024 budget. Elevated energy prices will cushion the revenue side, despite some weakening, with our 2024 Brent oil price forecast at $76.7/barrel, significantly higher than the $60/b assumed in the budget,” noted Oxford Economics in its Qatar economic forecast prepared by Maya Senussi, lead economist.According to Q3, 2023 budget data, revenues fell 24.5% year-on-year (y-o-y) while spending slipped by nearly 4% y-o-y, widening the quarterly budget surplus to QR12bn.Oxford Economics expects Qatar's economy will grow by 2.4% this year, 0.1ppt lower than its forecast last month. Survey data suggest growth momentum is faltering, as the PMI slid into contractionary territory in December for the first month since January 2023, when output adjusted following the FIFA World Cup Qatar 2022.Meanwhile, all components of industrial activity are in decline, boding ill for the outlook.The soft PMI survey for December continued the trend of subpar non-energy sector growth in 2023.Oxford Economics estimates the non-energy sector of the economy grew 1% in 2023 and see it expanding by 2.9% this year.There are pockets of strength, most notably tourism, as arrivals surpassed 3.5mn in the year to November, an all-time high. The number of visitors will likely climb near 4.5mn this year.The stock market also ended 2023 on a promising footing, as did the real estate sector, as the number of permits issued matched that of Q4, 2022 and values gradually recovered.The researcher’s 2024 external balance projection is modestly lower than a month ago at $24.6bn (11.2% of GDP) in light of our weaker gas price outlook. Shipping disruptions in the Red Sea could have a further negative impact as they have led to delays in Qatar's LNG shipments to Europe, according to the report.The 2023 trade in goods surplus narrowed by a third but remained wide at $66.3bn.The 2024 budget signalled fiscal prudence, reflected in Moody's upgrade of Qatar's credit rating, its first since 2007.Qatar's rating was boosted to ‘Aa2’ with a stable outlook, leaving it among the highest rated countries in the region (on par with Abu Dhabi and the UAE) and globally."We project Qatar’s fiscal surpluses averaging around 4.5% of GDP in the next three years,” Oxford Economics noted.