Doha is expected to continue its strong economic performance over the next year as it gears up to stage footballs Fifa World Cup in 2022
2015 breakeven oil price $59
2014 breakeven oil price $59
This year is set to be another strong 12 months of growth for Qatar as it prepares to host the 2022 Fifa football World Cup.
In April, Qatar National Bank (QNB) forecast that the countrys economic growth would accelerate to 7 per cent in 2015 and hit 7.9 per cent in 2017, driven mainly by ongoing project activity in the run-up to the tournament.
The forecast was released after new data revealed real GDP growth of 6.2 per cent in 2014 and after the government outlined plans to spend $182bn on capital projects over the next three years, excluding spending in the oil and gas sector.
Qatars non-hydrocarbons sector was the engine of growth in 2014, expanding by 11.5 per cent on the back of spending on large capital schemes, including infrastructure for the World Cup.
While there is no doubt that Dohas finances are strong, several factors make it difficult to forecast just how well the economy will perform over coming years. One of the key factors is global energy prices. Government data shows Qatars hydrocarbons sector contracted by 1.5 per cent over 2014 as global oil prices collapsed, falling nearly 50 per cent in the second half of the year.
QNB has forecast that the hydrocarbons economy will return to growth in 2015, with a 0.8 per cent expansion, but this is by no means certain if world oil prices remain low.
Qatar is the worlds biggest liquefied natural gas (LNG) exporter, and the price of LNG often lags behind oil prices due to the nature of gas contracts.
The Washington-based IMF has predicted a sharp fall in the value of Qatars hydrocarbons exports in 2015 and 2016, due to lower prices and a reduction in the volume of oil and gas shipped. It is expecting the value of exports to fall by more than a third during 2015 and a further 11 per cent in 2016.
While Qatars non-hydrocarbons economy is expected to drive growth in the run-up to the World Cup, it is difficult to estimate to what degree the countrys huge hydrocarbons industry is interlinked with sectors that are considered non-oil and gas industries.
In 2014, the extractives sector, including oil, gas and mining, made up 41.7 per cent of the countrys GDP, according to data provided by the Qatar Statistics Authority.
In April, the IMF forecast that Dohas government budget may fall into deficit from 2016 and warned that a prolonged period of poor performance by the oil and gas sector could well undermine Qatars economic growth.
Growth is expected to slow over the medium term as public investment growth tapers and the private sector
offsets the decline only partially, the fund said in a statement.
The main risks to the macroeconomic outlook are the possibility of lower-than-expected oil and natural gas prices, and the possible side effects of public investments in the form of short-term overheating and medium-term excess capacity.
Active projects in Qatar at the pre-execution stage are worth a total of $199.3bn, while schemes under execution are worth $103.4bn, according to regional projects tracker MEED Projects.
Project activity broadly reflects the data on economic growth published by QNB, with the non-hydrocarbons sectors seeing more investment. Construction and transport make up the majority of pre-execution projects, with construction taking 51 per cent of the total and transport contributing 29 per cent. Oil and gas projects make up just 1 per cent and 5 per cent respectively.
Among the major schemes helping to propel growth is the $35bn Doha Metro project, which will see just over 100 kilometres of track built for three lines by 2019.
Other rail projects include the Lusail light rail transit, which is well under way, and the long-distance rail network, Qatars tranche of the planned GCC railway.
Also included in the countrys transport projects is Qatars expressway programme, which is worth $20bn and is under execution.
Among ongoing construction projects is a $4bn scheme to upgrade and construct football stadiums ahead of the World Cup. Originally, Doha intended to refurbish three stadiums and build nine from scratch, but these plans are being reviewed and it is now more likely that only the minimum requirement of eight will be made ready to host the tournament.
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