Qatar’s real GDP growth has been forecast to bounce back next year with Oxford Economics saying it will grow by 5% year-on-year in 2021.
Qatar’s real GDP growth forecast for 2021 will be well above the Mena’s average of 3.5% and among the best in the GCC region. Only Oman’s real GDP growth forecast of 5.6% will be better than that of Qatar in the region, Oxford Economics said in its latest ‘Weekly Economic Briefing’.
Qatar’s current account (as a percentage of GDP) will also be in the positive territory (+2.9%) in 2021 from -2.6% this year.
Oxford Economics noted the “sharp oil output cuts” agreed by Opec+ countries in mid-April will cause “deep recessions” in oil-producing countries across the Middle East as they contend with both lower output and very weak oil prices, seen averaging just $33 per barrel in 2020.
“We now see GDP contracting by 3.1% in GCC oil exporters in aggregate as oil/gas accounts for some 30%-60% of their economies,” Oxford Economics said.
Following weeks of oil price war and against the backdrop of collapsing oil demand, Opec+ producers have agreed to slash output by almost 10mn bpd in May-June.
The scale of the cuts is set to ease to 7.7mn bpd in second half (H2) and 5.8mn bpd thereafter as oil market imbalances begin to correct.
But in the near term, the oil market will remain in “extreme oversupply, overwhelming storage capacity, as the standstill in global activity resulting from virus containment measures keeps oil prices severely depressed” at around $30.
Any price recovery beyond current levels will be conditional on a rebound in global demand, Oxford Economics said.
Oil producers are not the only economies in the region strained by virus-related shutdowns and struggling to patch up financing gaps.
Tunisia, where border closures and slowing trade will weigh on FX inflows and threaten the exchange rate and monetary stability, has been granted $745mn in emergency support from the International Monetary Fund.
The country may also seek international bond financing as the revenue outlook sours.
According to Oxford Economics, restrictions put in place to limit the spread of the coronavirus are unlikely to be eased across the Middle East just yet, with flight bans and some shutdowns extended until further notice. This is in contrast to a few European economies (Austria, Czech Republic, Denmark, and Norway), which plan to gradually relax lockdown measures over the next couple of weeks. Cases continue to climb in the Gulf Cooperation Council region.
Meanwhile the four North African countries – Algeria, Egypt, Morocco and Tunisia – have accounted for about 75% of all coronavirus cases on the continent so far, Oxford Economics added.
