By Sarah Townsend
Qatar National Bank analysis forecasts 3.3% growth for 2016, with oil price rise by 2018
Qatar’s real GDP growth is expected to grow from 3.3 percent in 2016 to 4.2 percent by 2018, as the country ramps up investment spending and oil prices start to recover, according to an analysis from Qatar National Bank (QNB).
QNB’s Qatar Economic Insight for July states that Qatar’s economy has weathered low oil prices due to an accumulation of savings from past low levels of debt and a low fiscal breakeven price.
GDP growth set to rise from 3.3 percent in 2016 to 3.9 percent in 2017 and 4.2 percent in 2018, with continued investment spending and initial production from Qatar’s new $10 billion Barzan gas project.
Meanwhile, oil prices are expected to recover over the medium term, rising gradually to $51 per barrel in 2017 and $56 per barrel in 2018 as declining US oil production and continued demand growth reduces excess supply, the report said.
In the meantime, however, lower hydrocarbon revenue and continued capital spending by the government are expected to result in modest deficits in 2016 and 2017 – the report did not give figures, according to state news agency QNA – but the rebound in oil prices should gradually bring the government back in balance by 2018.
The report also predicts inflation will rise to 3.2 percent in 2016 and 3.4 percent in 2017 in line with global inflation hikes, before easing slightly to 3 percent in 2018.
While the government is expected to continue its investment spending programme, it is likely to rationalise current spending resulting in modest decline in expenditure as a share of GDP between 2016 and 2018.
Credit growth is projected to reach 11 percent in 2016 and 9 percent throughout 2017 and 2018, supported by project lending and higher consumption from a swelling population.
The report also said Qatar’s loan-to-deposit ratio would stabilise at around 120 percent, and the outlook for banking is “positive” with low provisioning requirements efficient cost bases supporting productivity, it said.