By Neil Halligan
Gulf state is accelerating its preparations for the FIFA World Cup, which will see $135bn worth of contracts awarded
Qatar is set to award $30 billion worth of contracts in 2016, according to a new report.
Samba Financial Group, in its latest Qatar report, said it expects the second half of 2015 and 2016 “will be very busy with project activity”.
Citing research from MEED, the report said that with $30 billion to be awarded this year, Samba expects a similar amount to be spent next year, as the country accelerates its preparations for the FIFA World Cup, which will see $135 billion worth of contracts awarded in Qatar between 2015-2020.
“The government’s investment program will be one of the key determinants of economic performance over the medium-term. Although there is evidence that the authorities have scaled down certain projects in the light of the sustained fall in the oil price, crucially we expect most of the planned investment will go ahead,” the report said.
“The scale of investment relative to the size of the country, and the looming deadline of the 2022 World Cup, are challenging. But the authorities are well aware of the issues, including the risks of overheating, over-spending and poor yielding investments, and are looking to set up appropriate timelines and management processes,” it added.
The report said Qatar’s economy expanded by 4.1 percent in the first quarter of 2015, on the back of strong growth in the non-hydrocarbon sector. In particular, there were strong performances from trade, restaurants and hotels, construction and finance, it said.
There are slight concerns about the banking sector, with liquidity said to be tightening as robust double-digit credit growth has not been matched by deposit growth which is being curtailed by falling public sector deposits.
“This is worth monitoring, but we believe that the authorities have ample resources to address any liquidity and funding issues, although public sector projects may take priority over private sector lending,” the report said.
The report said it expects Qatar to maintain the exchange rate peg to the dollar.
“As regards the exchange rate peg, although there has been some muted pressure in the forwards markets, we fully expect the Qatari Riyal to maintain its peg to the dollar. Its macro-fundamentals remain sound, external assets large, and there are few policy advantages from abandoning the peg which has served Qatar well.”For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.