By Santhosh V Perumal
DOHA: Qatar’s economy is set to grow 9.5% in 2008 and 12.3% in 2009 on a sharp rise in gas and petrochemicals exports coupled with continued strong domestic demand, according to the Economist Intelligence Unit (EIU).
The optimistic projections came amidst an EIU forecast that global oil prices, which now hover around $86 a barrel, to average to $60-70 in the next two years.
“Overall, we expect real GDP growth to rise from an estimated 7.8% in 2007 to 9.5% in 2008. As the LNG (liquefied natural gas) programme gathers pace in 2009, economic expansion is expected to quicken further to 12.3%,” it said.
At least four new LNG “super trains” (largest in the world) were scheduled to begin production in 2008-09, and Qatar is seeking to inaugurate a large number of petrochemicals plants as part of its strategy to become one of the top-five producers in the world by 2012, the EIU said.
In addition, oil production is set to resume its upward trend, as the Organisation of Petroleum Exporting Countries gradually continues to loosen its output restraints, and the Dolphin gas pipeline to the UAE enters its first full year of operation, the publication said.
“Under our central forecast, the present tightness of the market, combined with the expectation that demand from Asia will remain strong, should allow oil prices to remain close to record levels,” it said.
World oil prices climbed to a record level yesterday in New York amid fears over tensions between Turkey and Kurdish rebels in Iraq. The EIU expects prices to remain stable at about $69.5 a barrel in 2008, before slipping slightly to $63.8 in 2009.
Nevertheless, it said, Qatar’s economy is expected to accelerate as high investment will boost growth, but its energy and infrastructure programmes will drive up imports, thus acting as a damper.
Beyond the energy sector, strong government spending on education, health and transport will help drive growth.
Strong government expenditure growth will also contribute to a large increase in private consumption (as nearly all Qatari workers were employed in the public sector). This will also be boosted by a rapid rise in the population (driven by a large influx of foreign labour), the EIU said.
Qatar will continue to pursue economic liberalisation, aimed at encouraging foreign investment and developing a diversified economic base, it said.
Qatar’s current account is expected to remain “comfortably” in surplus, supported by high energy prices and rising hydrocarbons output. “In 2008, export earnings are forecast to increase by 11%, from an estimated $33.3bn in 2007 to $36.9bn, led by rising oil sales and a strong pick-up in LNG output,” the EIU said.
Despite an anticipated drop in oil prices in 2009, “we expect total export revenue to climb by a faster 23% that year, to $45.3bn, as a jump in LNG exports is augmented by higher petrochemicals output,” it added.
Trade surplus is likely to widen in 2008, from an estimated $18bn in 2007 to $18.9bn, before increasing to $25.3bn or more than 30% of GDP in 2009 as import growth should slow to an average of 14% in 2008-09 from the present estimated 24%, the EIU said.
On the price front, the EIU said inflation, estimated to average 12% in 2007, is expected to fall gradually with new property projects coming on stream and global non-oil commodity prices dipping.
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