DOHA: Qatar has raised its forecast for economic growth and inflation for 2013 saying its growth will help push real gross domestic product (GDP) to 4.8 percent, from this June’s 4.5 percent forecast.
With an expected rising population and consequent higher residential rents, consumer price inflation is projected to rise to 3.5 percent in 2013, Qatar General Secretariat for Development Planning (GSDP) said in its updated Qatar Economic Outlook 2012-13 released here yesterday.
“A sharp fall in oil and gas prices and adverse geopolitical developments remain potential game changers, but the baseline forecast assumes that these risks do not materialize”, the GSDP’s revised document noted.
Among the underlying components of GDP, the main contributory factor in the upgrade is a smaller predicted decline in hydrocarbon output-0.2 percent versus 1.2 percent.
The non-hydrocarbon sector is expected to grow by 9.6 percent in 2013, a 0.1 percent upward revision on the June 2012 forecast. The service activity is expected to contribute more than 60 percent of the total growth in Qatar’s economy, and its share in total real GDP will have risen to 32.5 percent, from an expected 31.1 percent in 2012. Further expansion is anticipated in financial services, telecommunications and transportation, another service segments.
The share of industry-manufacturing, construction and utilities- in total output is also expected to continue rising in 2013, to 19.8 percent, from a projected 18.9 percent in 2012.
Construction is also seen performing strongly in 2013- about 10 percent growth- reflecting faster roll-out of Qatar’s infrastructure pipeline and catch-up on earlier project delays.
The forecast for nominal GDP growth for 2013 has also been revised up, to 5.3 percent as in June.
The update shows that inflationary pressure remained mild in 2012 but cautions that , with a rising population and demand, residential rents are now rising and could push inflation up in 2013. Consumer price inflation in 2013 is tipped to be about 3.5 percent.
The updated forecasts note fiscal and current account surpluses are expected to remain robust, with the fiscal surplus for 2013 revised up to 5.4 percent of GDP from June’s estimate of 4.8 percent. Upward revisions to estimated prices for gas underlie the brighter fiscal outlook.
The principal reason for this upgrade is a significant upward revision in the gas price forecast for 2013. Japan’s decision to reduce its reliance on nuclear energy has created heavy extra demand for gas that has already caused prices to escalate in 2012 by a t least 30 percent.
The revised economic outlooks reaffirms that the risks faced by Qatar’s economy are still mainly external. Problems in the eurozone continue to pose a wider threat, and if geopolitical developments interfered with Qatar’s ability to freely ship its oil and gas cargos, this would economically harmful.
On the 2012 economic performance, the update indicated that Qatar’s economy expanded by 6.4 percent in real terms during the first half of 2012, measured y-o-y against the same period in 2011. Although this half-year outcome is close to the full-year forecast of 6.2 percent made by the GSDP’s June forecast, second quarter output growth slowed sharply: real GDP grew by 5.1 percent in that quarter, down from 7.9 percent in the first.
The non-oil and gas sector performed strongly in the first half of 2012, rising by 9.5 percent from the same period in 2011. But its y-o-y growth in the second quarter slipped to 8.5 percent from 10.6 percent in the first.
The Peninsula
