(MENAFN- The Peninsula) By Sachin Kumar
The Peninsula
DOHA: Qatar’s economic growth this year is forecast to be higher than last year as real gross domestic product (GDP) growth is expected to be 3.9 percent in 2016, which is 0.2 percentage points higher than in 2015. Country’s real GDP grew by 3.7 percent last year.
Qatar’s real GDP growth is forecast to average 3.6 percent over 2016–2018, said ‘Qatar Economic Outlook 2016-2018’ report released yesterday. The report released by the Ministry of Development Planning and Statistics presents forecasts for the years 2016 to 2018 and reviews activity and economic performance in 2015. “Qatar’s real GDP growth is forecast to average 3.6 percent over 2016–2018, on the back of continued expansion in the non-hydrocarbon economy, which although moderating, remains strong,” noted the report. “Despite lower oil prices, real economic growth in 2016 is expected to rise to 3.9 percent, buttressed by continued vigour of the non-hydrocarbon sector and the boost to upstream hydrocarbon production from the Barzan gas project,” added the report.
Qatar is expected to outperform its Gulf Cooperation Council (GCC) countries in the outlook period in terms of GDP growth.
In 2017 and 2018 Qatar’s real growth will moderate to 3.8 percent and 3.2 percent respectively.
The report adds that inflation in 2016 is forecast to moderately pick up to 3.4 percent following rapid acceleration observed in January–April. The recent hikes to petrol prices in January of this year, as well as the removal of water and electricity subsidies in late 2015, will push up domestic prices. A slight pick-up in global commodity prices, and an anticipated softening of the US dollar will push imported inflation up further in 2017and 2018.
Given significantly lower oil prices and an erosion of hydrocarbon revenues, a fiscal deficit is projected for calendar year 2016, for the first time in 15 years, at just under 8 percent of nominal GDP. However, if the recent oil price rally persists, investment income will be shielded and fiscal deficit be lower than anticipated.
Breakeven oil prices for the fiscal balance are estimated at $61.5 per barrel for 2016, and above $65 for both 2017 and 2018.
“The fall in oil prices that began in June 2014 was not anticipated, and the rally that has been staged since January 2016 has been associated with considerable volatility. If they persist, lower oil prices will narrow the government’s fiscal cushion but our considerable financial reserves provide an ample buffer,” said Minister of Development Planning and Statistics H E Dr Saleh Mohamed Salem Al Nabit in a press release.
Given lower oil prices, the Outlook expects the current account of the balance of payments to post a small deficit in 2016, but if average oil prices for the year rise by one US dollar, the current account will balance. Surpluses are anticipated to resume with the forecast rebound of oil prices in 2017 and 2018. Dr Saleh added that “lower oil prices and the prospect of continued volatility serve to underline the importance of implementing the initiatives in Qatar’s National Development Strategy. These will help to diversify the economy and shield it from the vagaries of oil price movements.”