Driven by an expansion in the non-hydrocarbon sector, Qatar’s real GDP growth may scale up to 7% in 2015 from 6.4% estimated this year, National Bank of Kuwait (NBK) has said in a report.
The projected increase in real GDP growth will be due to a combination of accelerating infrastructure spending, including preparations for the FIFA World Cup 2022, expansion in the services sector as well as output gains from the completion of the Barzan gas production facility by end- 2015, which will bring additional volumes of hydrocarbon products such as condensates and natural gas liquids (NGLs) to the market, it said.
In its latest economic update NBK said having attained maximum LNG capacity of 77mn tons per year (tpy) in 2011, Qatar’s LNG output has reached a plateau. With a moratorium in place on further gas extraction projects in Qatar’s giant North Field and conservative management of Qatar’s ageing oil fields, both LNG and crude oil production are not expected to contribute to economic growth over the next two years; hydrocarbon sector real growth has slowed from a high of 28.9% in 2010 to 0.1% in 2013.
“The focus of economic growth has since shifted to the non-hydrocarbon sector and especially to execution by the government of the country’s ambitious public investment program as articulated in Qatar’s National Vision 2030. Driven primarily by accelerating activity in the manufacturing, construction, financial services and tourism sectors, growth in the non-hydrocarbon sector reached 11.4% in 2013 and is likely to continue in double digits over the forecast period and beyond,” NBK said.
Qatar equities’ stellar performance: The Qatar Stock Exchange (QE) Index has continued to perform strongly in 2014, breaching the 13000 level this year and was up by almost 32% YTD by end-May. Market sentiment has been further boosted over the last year in anticipation of the official inclusion of Qatar in both the MSCI and Standard & Poor’s Emerging Market indices.
The former took effect on June 1 with the inclusion of 10 listed companies, including QNB and Industries Qatar. Net investment flows by foreign institutions reached $835mn in May alone.
For their part, the Qatari authorities are raising foreign ownership limits for listed shares to 49% from 25% and proceeding with plans to broaden the appeal of the securities market with tools such as margin and derivatives trading, NBK said.