Qatar's economy is expected to pick up this year and inflation will ease to around 11.5 per cent as the country moves to halt a rapid rise in rents that have been blamed for most of the inflation, according to official estimates.
"Inflation in Qatar is projected at around 11.5 per cent this year, lower than the inflation rates last year and in the first quarter of this year," the Abu Dhabi-based Arab Monetary Fund (AMF) said, citing official Qatari estimates. "Yet this rate is still high as a result of pressure from rising rents and food prices... the surge in inflation has prompted the Qatari Government to take measures including halting rent rises for two years, plans to build low-cost houses and steps to control the rise in prices of building materials."
Qatar, which controls the world's third largest natural gas resources after Russia and Iran, has recorded the highest inflation rates in the oil-rich Gulf over the past two years because of a big leap in its economy and expatriate influx.
The boom has been a result of a sharp rise in oil prices and a steady expansion in the Gulf country's gas projects that have attracted massive foreign capital and thousands of foreign workers. The labour influx has sharply boosted demand for houses and created a supply bottleneck that led to a surge in rents.
High food prices have allied with strong domestic demand and a plunge in the Qatari rial against non-dollar currencies to keep inflation at record levels.
Qatari Central BankQatari Central Bank figures showed inflation stood at about 3.73 per cent in the last quarter of 2007 compared to the previous quarter.
But it was as high as 14.8 per cent at the end of the last quarter compared with the last quarter of 2006. The rate is expected to have slipped to nearly 13.7 per cent in the first quarter of 2008, according to the AMF.
"Qatar is also taking measures to mop up swelling domestic liquidity through plans by the Central BankCentral Bank to issue bonds and by raising the reserve requirement of banks to 4.75 per cent. This move is also designed to offset the Central BankCentral Bank's decision to cut interest rates in line with the United States' Fed rate cuts," said the AMF, the Arab League's main financial organisation.
Citing Qatari Government forecasts, it said the country's gross domestic product would grow by about 15.5 per cent this year compared with 12.5 per cent in 2007 as a result of a surge in oil and LNG revenues, and increases in investments in the real estate, infrastructure and financial sectors.
Figures by the Qatari state planning council showed the country's GDP grew from around QR206.6 billion (Dh208bn) in 2006 to QR232.4bn (Dh234.7bn) in 2007, an increase of nearly 12.48 per cent. The rise was far lower than previous projections by the government-controlled Qatar National Bank (QNB), which had expected the GDP to leap by 17.8 per cent on the back of higher oil prices and sales of liquefied natural gas (LNG).
A breakdown for 2007 showed the non-oil sector recorded higher growth of 16.8 per cent while oil and gas sector rose 9.3 per cent.
But economists said the non-oil growth was not real as it was spurred by higher prices of imports and other products in the country.
From 4.4 million tonnes in 1997, Qatar's LNG output jumped to 26.2m tonnes in 2006 and a record 30.9m tonnes in 2007. It is projected to surge to 45.9m tonnes in 2008 and 60 million tonnes in 2009 before peaking at nearly 77m tonnes in 2012 to maintain its position as the top LNG exporter.
Qatar PetroleumQatar Petroleum has allocated QR130bn (Dh131.2bn) for the LNG sector in its 2007-2011 plan.
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