FIFA World Cup Qatar 2022 focal point for country’s economic recovery: NBK
November 01 2020 09:17 PM
FIFA World Cup 2022™
FIFA World Cup 2022™

The FIFA World Cup Qatar 2022 will be the focal point around which the country’s economic recovery is expected to take place, according to National Bank of Kuwait (NBK).
While associated infrastructure, such as the transportation network have largely been completed, non-oil economic activity will rebound over the forecast period, averaging 3% as preparations intensify, NBK said in its ‘Economic outlook: GCC – 2020 to 2023’.
While gains are expected in Qatar’s construction and wholesale/retail trade sectors, services will also receive a much-needed boost from travel, tourism and transportation activity.
Hydrocarbon sector output will see some gains from the full commissioning of the long-awaited $10bn Barzan gas production facility. This should also boost condensates and natural gas liquid (NGL) volumes, but the most significant contribution will come between 2024 and 2027, when Qatar Petroleum (QP) raises LNG output by 64%, from 77mn tonnes per year (mtpy) to 126mtpy.
According to NBK, the “precipitous” drop in energy prices coupled with the expected drop in corporate tax revenues this year should see Qatar’s fiscal balance swing back into a deficit, equal to 6.2% of GDP, after two consecutive years of surpluses.
The authorities continue to tap both local and international debt markets to help finance the deficit. Qatar raised $10bn in a heavily oversubscribed Eurobond sale in April. Government debt, therefore, continues to rise, and could reach a high of 78% of GDP this year before falling back down to around 50% of GDP by 2023.
But, NBK noted the country’s large foreign assets, $40bn worth of official reserves at the central bank and around $300bn in its sovereign wealth fund, provide it with “ampl” fiscal and external sector buffers.
Qatar continues to enjoy a top tier credit rating (e.g. Aa3 by Moody’s) in recognition of its fiscal strengths, high per capita income and policy making stability.
NBK noted the coronavirus pandemic exacerbated what was already a relatively subdued inflationary environment, dominated by deflation due to oversupply and weak expatriate demand in the housing rents component of the consumption basket (21% weight).
The government stepped in to mitigate the Covid-19 fallout, announcing a $23.5bn stimulus package (15.5% of GDP) that consisted of central bank liquidity injections, suspensions of fees and taxes by the government, loans and guarantees to businesses from the Qatar Development Bank and investments by government entities.
"Looking ahead, an uptick in oil and gas prices, fiscal consolidation and expectations of an increase in activity ahead of the World Cup allied to ample fiscal buffers should see the economy on a sounder footing," NBK noted.    



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