Qatar’s real GDP growth is expected to reach 6.5% this year and 6.8% in 2014 on the back of continued economic diversification and non-oil sector performance, QNB Group said in its latest report.
The strong revenue stream from the oil and gas sector will support an expansive government expenditure outlay for infrastructure development going forward, as demonstrated by the large increase in expenditures in the 2013 — 14 budget.
An ongoing focus on the roll out of projects in the run-up to the 2022 World Cup and growing momentum in the manufacturing sector will continue to drive diversification and growth of the non-oil sector. the report said.
Assessing Qatar’s preliminary full year 2012 GDP data released recently, QNB said it showed that real GDP grew 6.2%, which was 0.4% points stronger than the bank had projected. The non-oil and gas sector was the main driver of growth in 2012, as QNB Group had expected, expanding by 10%.
The share of the non-oil and gas sector in the overall economy increased to 42.2% in 2012 from 40.7% in 2011. Growth in the oil and gas sector was just 1.7% as an increase in gas production to supply the new Pearl Gas-to-Liquids (GTL) facility more than offset declining crude oil production.
The same project helped drive strong growth of 11.8% in the manufacturing sector. Manufacturing was also supported by a ramp up in production of petrochemicals and fertilisers at new facilities.
Strong growth in government services of 11.5% in 2012 was another important factor driving growth, supported by expenditure in public administration, healthcare and education.
This trend is likely to continue with the recent 2013-14 budget announcement including 21% higher capital spending and 16% higher current spending than in the 2012/13 budget.
A pick up in project activity in the second half of 2012 boosted both construction and transport and communication. These sectors grew at 10.6% and 12.1% respectively in 2012. With the strong government capital spending increases, they are likely to see continued growth in 2013-14.
Financial services saw strong growth of 6.7%, although this is slower than in the rest of the non-oil and gas economy. With some major new road, rail and other project phases likely to be initiated in 2013-14, financial services should receive a positive boost going forward.
The trade, restaurants and hotels sector grew by 7.7% in 2012, driven by population growth. The average annual increase in the number of people in Qatar was 6.0% in 2012. The year-on-year increase has accelerated to an average of 8.5% so far in 2013, which should provide further impetus to this sector. Government efforts to promote Qatar as a destination for conferences have also helped boost this sector. Of particular note was the 18th UN Climate Change Conference in Doha in December 2012.
“Strong real growth in the non-oil sector is a positive indication for government plans to diversify the economy,” QNB said.