Qatar's growth will cool next year and its economy risks exposure to lower oil and gas prices caused by weaker global demand, the IMF said yesterday.
The economy has been expanding at double-digit levels for the past six years as it ramps up production of liquefied natural gas (LNG). In an effort to further boost development, the country has embarked on a US$150 billion (Dh550.9bn) infrastructure spending plan as it prepares to host the 2022 Fifa World Cup. "The economic outlook for 2012 remains positive, despite increased external risks. Real GDP growth rate is projected to moderate to 6 per cent in 2012," the IMF said after concluding its annual consultation with Qatar on December 1.
The IMF has estimated GDP growth of 18.7 per cent this year.
The slower growth comes as a large expansion of its gas output over several years comes to an end. Instead, the drivers of the economy are expected to slowly rebalance as the government begins to invest its hydrocarbon revenues and other non-oil and gas sectors expand. A new airport and a mass transit system are among the public works upgrades going ahead. "While real hydrocarbon GDP will slow down to less than 3 per cent due to the country's self-imposed moratorium on development of new hydrocarbon projects until 2015, large infrastructure investment and increased production in the manufacturing sector will boost growth in real non-hydrocarbon GDP, which will accelerate to 9 per cent," the IMF said. External risks threatened the economy's positive outlook over the medium term, it said.
"The principal risks ahead are lower oil and gas prices as a result of a decline in global demand, disruption in transportation of LNG due to increased geopolitical tensions, but the government has adequate financial cushions and a policy framework in place that would mitigate potential risks."
Inflation risks had also risen somewhat due to a permanent increase in public-sector wages, the IMF said. Inflation would average 2 per cent this year before doubling to 4 per cent next year.
In September, the government announced pay increases to state and military employees in a move estimated to cost as much as 30bn rials (Dh30.26bn).
The wage increase underscored the need for fiscal policy to monitor aggregate demand and the central bank to manage liquidity, the IMF said.
* with Reuters