By Santhosh V. Perumal
Business Reporter
Qatar's economy is expected to grow 3.7% this year but a pick up in hydrocarbons is slated to expand the real growth higher at 4.3% in 2016, then easing to 3.9% in 2017, according to official estimates.
Although a modest fiscal deficit of 4.8% of gross domestic product (GDP) is expected in 2016 against a surplus of 1.7% this year, an expected oil price recovery and continued spending restraint could see the deficit fall to 3.7% in 2017, the Ministry of Development Planning and Statistics (MDPS) said in Qatar Economic Outlook (QEO) for 2015-17 update with the new base year of 2013.
“While Qatar has not witnessed a budget deficit for 15 years, the state has ample means to finance it and that adjustments are now being considered that would build on Qatar’s solid financial position to help more firmly anchor its long-term fiscal sustainability,” Minister of Development Planning and Statistics HE Dr Saleh Mohamed Salem al-Nabit said.
The current account, which will see a surplus of 1.9% of GDP in 2015, is expected to post a deficit of 3.9% in 2016 and 2.8% in 2017.
The previous QEO 2015-17, released in June, projected real GDP growth of 7.3% in 2015, 6.6% in 2016 and 6% in 2017 but used 2004 as the base year.
The mining and quarrying sector has 54.8% weight as per 2013 base year against 40.9% with 2004 base year; while non-mining and quarrying segment has 45.2% compared to 59.1%.
Qatar’s non-oil and gas sector will post 10.1% growth in 2015 mainly on construction, which is to expand 13.5%; services by 9.8%, buoyed by population growth; and manufacturing, bolstered by the downstream hydrocarbon industry, particularly in fertilisers and other petrochemicals; even as refined products may fall, with expansion of other downstream activities.
Aggregate real growth
In 2016 and 2017, however, manufacturing growth will decelerate as the push from fertilisers and petrochemicals fades.
However, a 2.2% decline in hydrocarbon output will clip aggregate real growth in 2015, which is now expected to be 3.7%, it said, adding the contraction in (hydrocarbons) reflects a combination of shutdowns and maintenance of production facilities, as well as declining output from maturing oil fields.
Crude oil and condensate productions are now expected to be about 6% and 8% below 2014 levels respectively.
The anticipated recovery in oil prices in the last part of 2015 has so far failed to materialise and realised oil prices have fallen short of forecasts, it said, expecting lower oil prices and falling volumes in oil and gas to retard nominal GDP by 13.4% in 2015.
The non-hydrocarbons will continue to expand, but growth will attenuate, it said, adding activity on existing projects will start to “plateau” as they near completion, with many new investments being put off until after 2018.
Population growth is set to slow so that the stimulus that it has provided to non-traded service activity will start to wane.
“Downside risks to the outlook have amplified and include the possibility of a protracted period of low oil prices,” it said, adding any delays to delivery of, or cost overruns in, key infrastructure projects may add to fiscal demands in circumstances where revenues are being squeezed.
