Qatar’s government yesterday raised its forecast for real gross domestic product growth in 2013 to 5.3% from 4.8%, citing changes to its expected output of oil and gas.
The General Secretariat for Development Planning predicted growth of 4.5% next year. In 2012, GDP rose 6.2%.
Pipeline gas production will rise this year and unscheduled shutdowns, which limited energy output in 2012, are unlikely to be repeated, the secretariat said in a report.
“In 2014, upstream oil and gas is expected to contract as output from maturing oil fields tapers off and gas production hits installed-capacity limits,” it said.
The government’s fiscal surplus in Qatar, the world’s top exporter of liquefied natural gas, is expected to drop to 4.7% of GDP in 2014 from an upwardly revised 8.1% this year, the secretariat said. In its previous report last December, it had forecast a 2013 surplus of 5.4%.
“The overall surplus is expected to narrow in 2014 in the wake of the substantial increases in capital spending needed to keep Qatar’s capital projects on track,” it said.
Qatar plans to spend some $140bn on infrastructure in the next decade, partly in preparation to host the 2022 World Cup soccer tournament.
Inflation is expected to be 3.6% in both 2013 and 2014, up from 1.8% last year, the secretariat predicted.
“This forecast is consistent with somewhat higher inflation in the second half of 2013, but also anticipates that the accelerating inflationary trend seen since the second quarter of 2012 will peter out by end-2013,” it said.
Spending plans continue to drive growth as gas production plateaus
Non-oil growth continues in Qatar supported by “robust” domestic demand and “improved” banking sector liquidity, Barclays said in its latest report.
In Qatar, non-hydrocarbon activity is likely to continue to dominate the drivers of growth in 2013, on the back of increases in public spending in line with the country’s revised National Development Strategy, the report said.
Hydrocarbon growth has been muted in Qatar since Q2, 2012, while non-hydrocarbon growth has led the way, registering 11.85% year-on-year (y-o-y) in Q4, 2012 and more than 10% y-o-y for full-year 2012, supported by a sustained increase in public spending and credit growth.
“Qatar’s spending plans continue to drive growth as gas production plateaus; LNG production and exports run at full capacity,” the report said.
Contrary to Barclays’ expectations, GCC (Gulf-Cooperations Council) oil production increased in April and May, reversing the cuts that took place in Q1, 2013.
However, average GCC oil production rose only to 15.7mn bpd in April-May, up from 15.5mn bpd in Q1, 2013, and the 2013 year-to-date (YTD) average of 15.6mn bpd remains below the 2012 annual average of 15.9mn bpd.
So far, most of the increases have come from Saudi Arabia, whose production rose from an average of 9.1mn bpd in Q1, 2013 to 9.3mn bpd and 9.5mn bpd in April and May, respectively.
“So far, these trends remain in line with our 2013 forecasts: we expect average production to slip from 9.8mn bpd in 2012 to around 9.4mn bpd in 2013 in Saudi Arabia and to marginally increase in UAE and Kuwait,” Barclays said.
“However, we think downside risks to hydrocarbon growth have increased as recent data point to moderate GDP expansion in the US and a sharper-than-expected slowdown in Chinese growth.
“Our economists have downgraded their Chinese GDP growth forecast from 7.9% to 7.4% for 2013 and from 8.1% y-o-y to 7.4% y-o-y in 2014.”
While the Barclays still expects Chinese demand to strengthen in the short term, the lower GDP forecast and an apparent lack of momentum in manufacturing may see Chinese oil demand growth softening towards end-2013 and into 2014.
The report also said sustained credit growth remains a key driver of non-oil growth, despite some regional slowdown in the past few months.
Credit to the private sector averaged 39.1% y-o-y in Qatar during the first four months of the year, down from 58.3% y-o-y during the same period last year.
In Saudi Arabia, the monthly average remains at 15.7% y-o-y.
Strong growth in both public and private sector deposits in both countries and moderating credit growth led loans to deposits ratios (LDR) to ease further, while in the UAE, weak credit growth reflecting banks’ cautious approach to lending helped to improve liquidity, the report said.
In Dubai, the large exposure of most banks to sovereign-related entities, and ongoing restructuring, will likely see banks stay on the sidelines, despite a resurging demand for mortgage lending and accelerated recovery in the real estate sector, Barclays said.
Reported by: Caye Global News, Gulf Times
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