DOHA: Qatar is expected to continue posting double digit real growth rates in 2010 and 2011 of 16 percent and 18.6 percent, respectively, posting the highest growth rate in the GCC region supported by the five- year government spending plan which will maintain high levels of capital spending on infrastructure and real economic sectors, according to a research report by Kamco.
This came in the new edition of Kuwait-based Kamco’s Economic Note entitled ‘The State of Qatar Economic Brief and Outlook 2011’. The report provides a detailed analysis of the current economic situation in Qatar as well as the effects of hosting the World Cup 2022 on economic prospects.
The key features of the 2011 outlook include robust economic growth; easing in deflationary pressures; moderate recovery in credit growth; surge in capital expenditures for the preparation of the World Cup 2022; and a well capitalized and highly profitable banking sector.
The Kamco report also notes the Qatar’s government is placing special emphasis on developing the non-oil and gas sectors of the economy in an effort to diversify sources of income away from the exclusive dependence on the hydrocarbon sector.
Qatar’s growth outlook remains strong as the country’s strategy remains committed to diversify the economy by expanding industries related to the LNG value-chain and linking upstream, midstream and downstream components.
Qatar’s GDP reached QR358bn ($98.3bn) in 2009. It is expected to reach QR460.6bn ($126.5bn) and QR575.3bn ($158bn) in 2010 and 2011, respectively, the report shows.
Non-hydrocarbon Real GDP continued to register double digit growth rates from 2005-2008 before falling to 8.0 percent in 2009 and is expected to pick up in the medium term due to strong activity in the services sector. Hydrocarbon Real GDP is also seen to increase on boosted LNG production.
Qatar’s per capita GDP remains one of the highest in the world despite falling to QR247,413 ($68,008) in 2009 from QR332,797 ($91,478) and QR278,108 ($ 76,374) in 2008 and 2007, respectively.
The Statistical Review of World Energy published by BP estimated Qatar’s oil reserves to be 26.8 billion barrels in 2009, unchanged from 2008, however, decreasing from 27.4 billion barrels in 2007.
Qatar currently has the highest rating among the GCC countries by Moody’s, Standard & Poor’s and Capital Intelligence with a ‘Stable’ Outlook.
Qatar experienced the sharpest deflation among GCC states in 2009 at 4.9 percent mainly on the back of a sharp drop in rents, following a high inflation of 15.2 percent in 2008.
The banking sector remains profitable and well capitalised, and will show resilience to further financial turbulence that might happen in the medium term, supported by the commitment to provide banks with liquidity to contain potential financial risks.
Risks to the medium-term economic outlook may arise from the slow global economic recovery, a further drop in property prices, slowdown in credit growth, tight credit conditions in the international capital markets and the reduced availability of financing for projects.
Despite the slowdown in credit growth in 2009 to 11.5 percent compared to 51 percent in 2008, year-to-date figures suggest that credit growth started to pick-up and surpassed the 16 percent level in 2010.
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