Since 2011, Qatar has successfully completed its 20-year investment plan to commercialize its natural gas reserves, the third largest globally with 25 trillion cubic meters or 13.0 percent of the world’s total proven reserves. This has led Qatar’s economy to almost double over the last four years to $ 192.3 billion as of 2011. Qatar's economy is expected to moderate to a steady rate of 5.2 percent in 2013 (6.6 percent in 2012), following record double-digit growth in 2006-2011. The nonoil and gas sector, which is estimated to expand 9.9 percent in 2012, is expected to drive growth in Qatar's economic expansion during 2012 and going forward, according to Global Investment House's review of the Qatar economy.
Oil and gas sector was significant contributor to the overall GDP at 42.6 percent in 2012. LNG production more than doubled in 2009-2011 to 74.8 million tons. With an additional 3.9 percent increase expected in 2012, LNG production is expected to stabilize at 77.0 million tons till 2017. Crude oil production, after a slight 0.5 percent increase expected in 2012, would continue to decline at CAGR of 5.7 percent to 559,000 bpd in 2017. Qatar has placed a self-imposed moratorium on the development of the new hydrocarbon projects until 2015 to assess the sustainability of increasing production and carry out a comprehensive study of its North Field.
Nevertheless, the significance of the oil and gas sector has been waning in recent times, as the government’s efforts to diversify the economy away from its reliance on hydrocarbons are coming into effect. Share of the nonoil and gas sector in the overall economy increased to 57.4 percent in 2012 from 40.7 percent (2011). Focus on the manufacturing sector, particularly in the manufacturing of petrochemicals, and the roll-out of infrastructure projects in the run-up to the 2022 World Cup, would continue to drive economic diversification and growth of the nonoil sector.
Qatar plans to invest $ 200.0 billion over the next 10 years as part of its preparation for the 2022 FIFA World Cup, and a significant part ($ 140 billion) would be spent in the first five years in projects such as new airport, seaport, and a rail and metro system. These projects are expected to be complemented by additional investments from Qatar petroleum ($ 50 billion) and other public and private firms ($ 100 billion).
Furthermore, the Qatari government aims to increase spending on public administration, health care, and education as part of its new 2013-2014 budget, including 21 percent higher capital spending and 16 percent higher current spending than in the previous budget.
Consumer price index stayed constant in 2012. Small increases in the international commodity prices, coupled with excess supply in the housing market, helped limit the inflationary pressures in 2012. Large salary increases for public sector employees in 2011 and expansionary fiscal and monetary conditions bolstered liquidity in the market, adding to the increase in CPI. Rental costs have shown steady signs of revival in the recent months, becoming less of a cushioning factor in containing inflation. Rental costs bottomed out in April and May 2012, and by August, climbed above their year-earlier level, adding about 0.5 percentage points to inflation in 2012. Rest of the components in CPI, with the exception of entertainment, recreation, and culture, trended downward in 2012, restraining inflation.
Inflation is expected to accelerate to 3.0 percent in the next two years and increase further to 4.0 percent every year till 2015 and is forecasted to grow at 5 percent for the rest of the forecasted period till 2017. Residential rents would be the key swing factor in the years ahead. Increasing expatriate population growth from 2022 World Cup-related projects and supply-side factors in the form of income and credit growth are expected to add upward pressure on housing costs. A strong US dollar and declining international food prices may keep a lid on imported inflation while housing market recovers.
Qatar reported another trade surplus during 2012, as exports rose 17.0 percent to $ 131.5 billion, while imports increased at a slower rate of 14.3 percent. Trade surplus grew 17.8 percent in 2012 in addition to the 62.2 percent increase registered in 2011. Exports continued to be driven by LNG, which represents over 60.0 percent of the total exports.
The current account surplus increased 19.9 percent YoY to $ 61.3 billion in 2012, led by high gains from trade surplus, which offset non-merchandise deficit. Similar to the trade surplus, the current account surplus is expected to decline to $ 57.1 billion in 2013, as rising imports and non-merchandise outflows drag down surplus.
Endowed with the large surplus from oil and gas exports, Qatar has continued to acquire foreign assets. In addition, repatriation of proceeds by foreign corporations, following the completion of LNG infrastructure expansion, led foreign outflows. Foreign outflows (net) were $ 1.5 billion in 2012 due to a $ 1.8 billion outflow, though Qatar received $ 324.0 million of foreign investment. Portfolio investments remained volatile, reflecting the general weakness in the financial markets.
Qatar has the lowest unemployment rate among GCC countries. Total unemployment stood at 0.3 percent in 2012, same as six years ago. Unemployment among Qatari nationals was higher as compared to the expatriates, primarily due to a high level of unemployment among women nationals. Unemployment among women stood at 2.8 percent in 2012, down from 4.6 percent in 2011, while 0.1 percent of male labor force was unemployed in 2012, down from 0.5 percent in 2011. Reforms in the education sector and labor policy, as part of the Qatar National Vision 2030, are expected to help fix the unemployment issues among Qataris.
Non-Qatari’s represented 93.9 percent of the labor force in 2011, down from 94.2 percent in 2010. Construction sector, the largest employer of expatriates, accounts for close to half of the non-Qatari labor force. As employment in the construction sector is tied to specific ongoing projects, the composition of labor force remains transient, with workers’ residency expiring at project completion.
Qatar’s GDP expected to grow 5.2% in 2013
