(MENAFN- The Peninsula) Driven by non-hydrocarbon sector, Qatari economy is projected to grow by a robust 7.7 percent next year despite the pressure on oil prices. The predicted growth rate in 2015 would be Qatar's fastest expansion since 2011 and an acceleration from 6.3 percent estimated for this year.
An update of "Qatar Economic Outlook 2014-16" released by the Ministry of Development Planning and Statistics (MDP&S) yesterday noted little change is expected in 2016, with growth of 7.5 percent. "In 2015, with momentum still gathering in non-hydrocarbons, the sector's share of GDP will overtake that of oil and gas, and continue rising in 2016 and beyond. This diversification of output and the broadening of the economic base is very welcome. However, to support long-term deepening of the economic base, more needs to be done to boost private sector participation in the economy and the upgrading of skills, technology and productivity." the Minister of MDP&S, H E Dr Saleh Al Nabit, said.
Inflation is forecast to average 3 percent, again unchanged from the June forecast. Only marginal increases over this number are seen after that, with inflation inching up to 3.5 percent in 2015 and to 3.7 percent in 2016. Domestic sources of inflationary pressures are expected to build over the projection period as local demand strengthens. The vigorous growth of local demand will push up prices of non-tradable goods and services, including rentals, especially in affordable housing for the low- to middle-income segment of the market where availability is usually tighter.
The fiscal surplus is predicted to remain robust in 2014 at nearly 13 percent of GDP, though down a little on 2013's outcome, and is set to narrow further over the rest of the period .
The strong boost to the fiscal surplus that larger investment income transferred from Qatar Petroleum (QP) in 2013 and 2014 is set to moderate gradually over the rest of the outlook period. This fading impetus is expected as hydrocarbon receipts continue declining and as QP spending picks up over 2015€2016, with investments in recovery of oil from maturing fields.
The steep decline in oil prices seen in recent months will affect fiscal revenues. Yet Qatar still has a substantial fiscal buffer that will help cushion the domestic economy from potential adverse fall-out. Against this, however, Qatar's "break-even" oil price is expected to rise in 2015 and 2016, and the buffer could narrow. "A variety of initiatives now underway at the Ministry of Finance, which will promote a forward-looking approach to fiscal management and improved planning and running of the state's capital programme, will help shield Qatar against oil price shocks in the years ahead," said Dr Saleh.
In the first half of 2014, exports, dominated by hydrocarbons, were the single largest component of demand, accounting for 73.3 percent of GDP. Investment contributed 29.1 percent, household consumption 14.1 percent and government consumption of final goods and services 13.9 percent. Imports, a leakage from demand in the domestic economy, amounted to 30.5 percent of GDP. Qatar's saving rate tracked up by 2.3 percentage points, reaching 59.5 percent of nominal GDP.
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