MENA Asset Management Survey 2012 - National Bank of Abu Dhabi

Qatar
Economic Developments
Hydrocarbon contribution to output growth levels off
Qatar’s economy has grown by double digits in real terms each year since 2005. Growth
is projected to decelerate to about 5% in the medium term because output growth
in the hydrocarbon sector - which accounts for a significant proportion of the economy
– is tapering off. There are, in turn, two drivers of the slowdown in the pace of
hydrocarbon activity. First, a moratorium on further gas exploration at the North Field
until 2015 – and potentially longer given the introduction of supply from elsewhere in the
World - will mean flat gas sector contribution to output growth. Second, aging oil fields
will mean a decline in crude oil output. The upshot is that in the medium term the main
driver of growth will be the non-oil sector.
Non-hydrocarbon activity still on boosters
The country plans to invest US$ 130 billion (77% of 2012F GDP) in the nonhydrocarbon
sector between 2012 and 2018 in preparation for the 2022 FIFA Soccer
World Cup. One of the high profile projects is a rail network estimated to cost US$ 37
billion.
Diversification of economic base being pursued with ample resources
In 2011, the country registered a trade surplus of US$ 87.4 billion driven by exports of
US$ 114.3 billion. Income, service, transfer accounts registered deficits producing a
current account surplus of US$ 58.8 billion (33.9% of GDP). Data suggest a small
decline in crude oil output in 2012 compared to 2011. Current account surpluses of
28.8% and 21.6% of GDP are forecast in 2012 and 2013. Budgetary expenditures
have risen sharply in the last decade, growing on average by 22% p.a. since 2002/2003.
The country registered a budget surplus of 3.1% of GDP in 2011/2012, up from 2.9% of
GDP in 2010/2011. At the end of May, FY 2012/2013 plans were released. Spending on
public sector wages was raised by +48%, while spending on projects was raised by +7%.
Official expenditure target was US$ 48.9 billion, with a surplus of US$ 7.7 billion
(government target 8% of GDP).
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