Qatar GDP growth to plunge in 2012

Qatar’s real economy is projected to extend a rapid expansion it has recorded over the past few years into 2011 but growth will sharply slow down in 2012 after the completion of its mega gas projects, IMF data showed.

The Gulf country’s real GDP, which has recorded one of the world’s highest growth rates over the past decade, leaped by nearly 16.6 per cent in 2010 and is forecast to pick up by 18.7 per cent in 2011, the Washington-based International Monetary Fund said in its latest Middle East and North Africa report.

The report expected GDP growth in the world’s third largest gas power to dive to nearly six per cent in 2012 but gave no reason the sharp fall.

Analysts attributed it to relative stability in the country’s gas supply growth following the completion of mammoth projects to boost output to 77 million tonnes per year. The country’s LNG exports had grown by at least 15 per cent annually over the past 10 years before stabilising at the peak 77 million tonne level at the end of 2010, when the projects were completed.

The sharp expansion in Qatar’s gas industry has catapulted its economy and turned it into one of the richest nations on earth before becoming the wealthiest in terms of GDP per capita income in 2010.

Qatar’s GDP shot up by nearly 26.8 per cent in 2007 and 25.4 per cent in 2008 before growth tumbled to only 8.7 per cent in 2009 following a sharp drop in oil prices in the wake of the 2008 global fiscal distress.

But growth in 2009 is considered high compared with the rates recorded in other parts of the world, where it dipped to near zero or recorded negative growth.Higher LNG output boosted Qatar’s total hydrocarbon export revenue to a record high of nearly $66 billion before it slumped to $44bn in 2009.

But it sharply rebounded to $64bn in 2010 and could hit another record this year.Qatar launched LNG projects in early 1990s to tap the massive gas wealth of the 6,000-square-km offshore North Field, estimated at around 25 trillion cubic metres, nearly 15 per cent of the world’s total gas deposits. The country, a member of the 12-nation OPEC, became the largest LNG supplier in the world when it pumped around 40 million tonnes in 2009. Production capacity is now estimated at 77 million tonnes per year.In a report this week, Oxford Business Group (OGB) said it expected Qatar to retain its position as the world’s fastest-growing economy this year, with the country’s core sectors performing strongly and diversification continuing apace.

“Qatar was the world’s fastest-growing economy between 2006 and 2010, with a compound annual growth rate (CAGR) of 15.7 per cent, according to QNB Capital, and the institution expects this to continue in 2011 as well,” it said.QNB Capital, part of Qatar National Bank, has said public investments in the natural gas industry and other sectors have helped drive both “rapid growth and diversification of the economy”.

The non-hydrocarbons economy achieved a CAGR of 16.4 per cent between 2006 and  2010, with sectors such as manufacturing, financial services and construction expanding rapidly.

“Having survived the international economic storm largely unscathed, Qatar is now strongly positioned to continue its rapid ascent, even amid concerns surrounding the US economy’s health, the eurozone’s stability and the sustainability of China’s GDP growth,” OGB said.

“These are considerable risks, but Qatar is nonetheless in an enviable situation….. its financial system is well capitalised and has low levels of non-performing loans. The government is also able to spend heavily at a time when others are tightening belts.”

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