Gov't report says economy is likely to grow faster this year than previously expected
Qatar's economy is likely to grow six percent this year, slightly faster than previously forecast, partly because of higher gas production, the Ministry of Development Planning and Statistics said in a report on Monday.
Gross domestic product growth in the world's top exporter of liquefied natural gas is forecast to ease to 4.6 percent in 2014 as output from maturing oil fields contracts and gas production levels out, the report showed.
However, vigorous investment spending, an expansionary fiscal stance and a continuing influx of workers to Qatar, the host country of the 2022 World Cup soccer tournament, will sustain strong domestic demand, the ministry said.
In their previous economic outlook, released in June, Qatari authorities forecast 2013 growth of 5.3 percent and 2014 growth of 4.5 percent, down from 6.2 percent in 2012.
Government spending is projected to rise 10.8 percent in 2013 against the latest preliminary outcomes for calendar year 2012, and by 11.6 percent in calendar 2014, reaching 30.7 percent of GDP, the report also said.
"Government expenditure realised in the first half suggests that the full-year outturn may exceed the budgeted amount, even though capital disbursements have so far been slower relative to the same period in the previous year," Minister Saleh al-Nabit said in the report, referring to the current fiscal year.
The OPEC member boosted budget spending by 17.9 percent to a record QR210.6bn ($57.8 billion) for the 2013/14 fiscal year, which started in April. The ministry is using the calendar year for the fiscal outlook in its latest report.
The fiscal surplus is expected to drop to 3.8 percent of GDP in calendar 2014, less than the 4.7 percent seen in the June report, from a downwardly revised 6.1 percent in 2013. In its previous report, the ministry forecast a surplus of 8.1 percent of GDP this year.
Qatar, which pegs its riyal currency to the U.S. dollar, plans to spend some $140 billion on infrastructure, including a new airport, roads and stadiums in the next decade, partly in preparation to host the World Cup.
Inflation is expected to average 3.2 percent in 2013, up from 1.9 percent in 2012 due to rising rental costs, then pick up further to 3.5 percent in 2014. The ministry's previous forecast was 3.6 percent for both 2013 and 2014.
"Inflationary pressures are unlikely to subside in 2014. The inflationary impact of vigorous growth of domestic demand is expected to offset an expected moderation in global food and commodity prices and subdued inflation in trading-partner countries," the report said.
Analysts polled by Reuters in September forecast Qatar's GDP would grow 5.3 percent in 2013 and 5.1 percent in 2014, and inflation would reach 3.5 percent and 4.0 percent, respectively.