DOHA: Qatar’s real GDP growth in 2015 is projected to rise to 7.3 percent, driven by a strong non-hydrocarbon sector and the boost to upstream hydrocarbon product from Barzan gas project. Service sector will be the largest contributor to growth, followed by construction, according to a report released by the Ministry of Development Planning and Statistics (MDPS) yesterday.
The “Qatar Economic Outlook 2015-2017” noted the country’s real GDP or GDP adjusted by inflation, is expected to remain strong in 2015 and is set to carry through to 2016 and 2017, before it moderates. The outlook foresees that the country’s overall fiscal balance will register its first deficit in 15 years, in 2016.
Consumer price inflation is expected to moderate in 2015 before edging up in 2016 and 2017. Annual inflation is expected to average two percent in 2015, down from 3.3 percent in 2014. Partially, the subdued inflation outlook is due to a lower weight of the housing and utilities component of the index, which has been the principal driver of consumer price inflation in the past two years. However, a modest pickup in the inflation is expected in 2016 and 2017, if dollar appreciation loses momentum.
Qatar’s fiscal surplus is expected to narrow considerably in 2015 to 1.4 percent of nominal GDP, down from 12.3 percent in 2014. In 2016, it is foreseen that the overall fiscal balance will register its first deficit in 15 years, an estimated 4.9 percent of GDP. Breakeven oil prices for the fiscal balance are estimated at $86.4 per barrel for 2016 and $88.0 for 2017.
“This estimate assumes that growth of current government spending continues to move on to a lower trajectory than in the recent past; there are effective cost reductions in the hydrocarbon sector; and additional non-oil and gas revenues accrue to budget. However, deficit still appears, as a consequence of an anticipated squeeze on hydrocarbon-linked revenue”, the document noted.
“The assessment has been made at a time of sharp adjustments and increased volatility of oil prices, which widens the margins of uncertainty round the central forecasts. Over the projection horizon, the non-hydrocarbon sector will continue to account for most of the economy’s expansion”, H E Dr Saleh Mohamed Salem Al Nabit, Ministry of Development Planning and Statistics, said.
The main downside risk to the outlook is the possibility that oil prices will not track higher in 2016 and 2017, as the forecast assume, he added.
The Peninsula
