QNB Group says it expects Qatar’s growth to rise on higher oil prices, eased fiscal constraints and investments in LNG production, QNA reported.
The Group yesterday published Qatar Economic Insight December 2017. The report examines recent developments and the outlook for the Qatari economy.
Real GDP is expected to rise to 2.5 percent in 2018 and 3.4 percent in 2019 before slowing slightly to 3.3 percent in 2020 as higher oil prices lead to relaxed fiscal constraints and as investment in the long-term expansion of LNG production lifts growth, QNA reported yesterday.
In the hydrocarbon sector, the extension of the Opec production cut agreement in 2018 will keep oil production flat, but hydrocarbon production should pick up thereafter as the output cuts are lifted and as new gas production from the Barzan project comes on line in 2020.
The non-hydrocarbon sector will be supported by relaxed fiscal constraints and by investment in a raft of new projects related to the planned 30 percent
increase in LNG production due in 5-7 years’ time, which will lend support to jobs growth and domestic demand from 2019 onwards.
The oil market is expected to balance over the near-term with oil prices averaging USD58/barrel in 2018 and USD60/b in 2018-20.
Inflation is expected to spike in 2018 to 2.4 percent with higher oil prices and the introduction of VAT in the second quarter before easing, as oil prices level off and the impact of VAT fades, to 2.1 percent in 2019 and 1.6 percent in 2020.
The government’s budget deficit is expected to narrow to -0.5 percent in 2018 before switching to a surplus of 2.0 percent and 4.0 percent in 2019-20 on a recovery in hydrocarbon revenue from higher oil prices and the introduction of VAT.
Capital spending should continue in 2018 from the implementation of World Cup related projects. In addition, from 2019, LNG-related projects should push capital spending up further. Fiscal constraints on current spending are expected to persist in 2018 before easing in 2019-20.
The current account surplus is expected to rise to 2.2 percent in 2018 and 2.9 percent in 2019 on higher oil prices and the eventual removal of Opec production caps, before moderating to 2.5 percent in 2020 as oil prices flatten.
International reserves are expected to be maintained at their current level of around six months of prospective import cover.