Doha: Qatar’s economy is shifting towards a positive momentum with non-energy sectors playing a critical role in enhancing the growth rate.
According to Johnny Archer, Director of Consulting and Research in Qatar at Cushman and Wakefield, “Demand for goods and services appears strong across non-energy sectors, leading to near-record employment growth and robust output expansion.”
The analyst noted that business confidence is advancing, and the projected economy in 2025 is estimated at 2.8% next year.
Qatar’s GDP grew by 1.2 percent annually in 2023, slightly above the 1.1 percent forecast by the group towards the end of Q3. The decline in energy output left growth flat in Q4, marking the weakest quarter since early 2021 despite a 1.7 percent Y-O-Y expansion in non-energy activities.
The latest PMI survey showed business conditions have continued to improve, consistent with a 2024 non-energy sector growth projection of 2.4 percent.
Oxford Economics has cut their 2024 GDP growth forecast for Qatar by 0.1 percent to 1.9 percent to reflect the ongoing “drag” from industry.
The report also indicates that energy prices are lower than a month ago despite a ramping up of geopolitical tensions in the region. 2025 Brent oil price forecasts are lowered to $72.6 per barrel. A lower oil price will weigh on the external and fiscal balances.
But with next year’s budget unlikely to bring markedly looser fiscal policy, the data shows that the fiscal surplus will reach QR26.4bn (3.2 percent of GDP) in 2025, higher than the QAR24.5bn outturn projected for this year.
Meanwhile, the average inflation prediction remains unchanged at 0.9 percent in 2024 and will increase to 1.8 percent in 2025. Headline inflation rose to 1.2 percent in August, from 0.2 percent in July, lifted primarily by higher communications and recreation and culture prices.
On the other hand, restaurant and hotel prices also elevated rapidly, while clothing, housing, and utilities remained on a disinflationary path. Rising wage pressures and non-staff costs will push output prices higher in the months ahead, contributing to a rise in inflation into 2025, said Oxford Group.
The central bank lowered rates by 55bps in September in the wake of the US Federal Reserve’s bold 50bps rate cut. Oxford Economics’ updated baseline includes 25bps cuts in November and December.
Market experts at the group, however, anticipate one 25bps cut per quarter in 2025, which will lend support to the economy and the local equity market.
