Qatar’s non-oil sector “should stage a recovery” this year on the back of the private sector credit accelerating, growing by more than 20% year-on-year since August 2019, Oxford Economics has said in a report.
Oxford Economics’ non-oil momentum indicator (NOMI) for Qatar suggests a turnaround for the non-oil sector.
“It may not be on the cusp of expansion just yet, but the data points to diminishing contraction in Q4, marking the first sign of improvement since late-2017. The improvement has been most prominent in credit indicators and construction permits, offset to some extent by weaker real estate prices and unsupportive gas price dynamics,” Oxford Economics noted.
“However, with the January non-oil PMI sliding deeper into negative territory again, we will cut our forecast for non-oil GDP growth to under 3% from 3.5% currently, though this will still represent a significant improvement on the estimated 0.1% in 2019,” the researcher said.
The GCC non-oil momentum indicators – details of which Oxford Economics provided earlier – had shed light on non-oil performance ahead of actual GDP data releases.
“The importance of our NOMI is significant,” the researcher said and noted it is still awaiting third quarter 2019 (Q3) figures for Qatar.
Recently, Oxford Economics noted “weakness in Qatar’s non-hydrocarbon sector is fading.” Growth in the non-oil sector averaged 3.5% in 2017-18 but slowed in 2019, notwithstanding outlays on infrastructure projects in preparation for the 2022 World Cup.
However, with some improvement in Q4 last year, including in the real estate sector, Oxford Economics believes non-oil activity eked out marginal growth of 0.1% in 2019, and it expects an acceleration to 3.5% this year.
Oxford Economics had said Qatar economy would see further improvement in the medium term and noted the country’s GDP growth is seen averaging 2.9% in 2021-22.
Key factors behind Oxford Economics’ near-term projection on Qatar economy include some recovery in crude production, hydrocarbon sector gains because of gas prioritisation, fading weakness in non-hydrocarbon sector, supportive budget spending, sound banking sector, subdued inflation and efforts to revive tourism.
The economy should gradually recover over the course of 2020, when Oxford Economics forecasts growth of 2.3%, with further improvement in the medium term, amid ongoing investment ahead of the World Cup 2022 and a rise in gas production.
Oxford Economics also sees “some recovery” in the country’s crude production in 2020.
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