Although the economy expanded at a weak pace in the first three months of 2018 due to a decrease in mining and quarrying output, construction activity increased significantly as preparations continued for the 2022 World Cup. Qatar’s economy this year should be supported by higher oil prices, economic reforms and the government’s infrastructure investment push in preparation for the 2022 World Cup, FocusEconomics has said in a report. FocusEconomics panellists forecast a growth of 2.6% in 2018, which is down 0.2 percentage points from last month’s projection, and 2.8% again in 2019. Hydrocarbons form the bedrock of Qatar’s economy, it said and noted that despite the government’s concerted diversification efforts, oil and gas revenues still account for around half of GDP, some 90% of fiscal receipts and the bulk of exports, making the country vulnerable to global price swings.
After oil and gas prices tanked a few years ago, the Qatari economy followed suit, with growth dropping from 4.4% in 2013 to an estimated 2.6% last year. “However, Qatar has had a softer economic landing than most other oil-exporting nations. Prudent spending in the years leading up to 2015 means the country’s breakeven oil price is substantially lower than the GCC average,” FocusEconomics said. “Over the next two years, growth should be lifted by moderately higher oil and gas prices, while the new Barzan gas project will boost gas production by 1.4bn cubic feet per day,” FocusEconomics said.
Getting ready for the FIFA 2022 World Cup, which Qatar is hosting, is proving to be an enormous task, with huge investments being made on the construction of stadiums, hotels, roads and sewage works. Qatar has already declared that two thirds of projects will be delivered this year and next, which will provide domestic demand with a welcome shot in the arm going forward. Improving productivity, FocusEconomics said will be vital if Qatar is to continue to expand at a healthy rate going forward.
“In order to wean itself off its dependence on oil and develop a knowledge-based economy, progress is needed to improve the business environment, increase human capital and improve the efficiency of public investment. The government is keenly aware of this fact, and the 2030 National Vision plan provides a blueprint for the type of competitive, diversified economy Qatar yearns to nurture,” FocusEconomics said.
Sources and photo-credits: Gulf Times