DOHA: Despite lower oil prices, the Ministry of Development and Planning Statistics (MDPS) Qatar Economic Outlook 2016–2018 report suggests real economic growth in 2016 is expected to rise to 3.9 per cent, strengthened by continued vitality of the non-hydrocarbon sector and the boost to upstream hydrocarbon production from the Barzan gas project. However, nominal gross domestic product (GDP) is expected to contract by 2.9 per cent, reflecting the drop in global hydrocarbon prices.
The MENA Economic Monitor Report–Spring 2016, estimates that Qatar may sustain real GDP growth averaging 3.6 per cent between 2016 and 2018, due to efforts to drive growth in the non-hydrocarbon sectors. Growth moderated to an estimated 3.7 per cent in 2015, down from four per cent in 2014, and has been primarily driven by the non-hydrocarbon sector, and the construction, transport, communications, and financial sectors continue to perform well.
In 2016, the Government tightened its fiscal policy with the budget announcement showing a decline in both current and capital spending, resulting in a total budget of $56 billion compared to $60 billion in 2015. However, the investment commitments for the 2022 FIFA World Cup Qatar, and its plan to diversify the economy, restricted the Government’s ability to reduce capital spending, instead it started to remove subsidies, raised fuel prices in January, and looked to develop new revenue sources such as planning for the implementation of a value added tax (VAT) with other GCC countries on 1 January 2018.
Qatar is expected to spend $70 billion to $80 billion a year between 2015 and 2017, according to Qatar National Bank QNB) group CEO, Ali Ahmed Al Kuwari who said the bulk of the expenditure is aimed towards real estate developments and rail, road, airport and port projects in the transport sector. The Lusail Mixed Use Development is the largest in the list of major projects at $45 billion, and is expected to be completed in 2022 while the Qatar Integrated Rail project has an investment of $40 billion, and should be completed in 2026.
Further investments include the Ashghal Expressway Programme, which will cost around $20 billion and is expected to be completed in 2018; the Hamad International Airport, at a cost of $15.5 billion, to be completed by 2020, and the Ashghal Local Roads and Drainage project, costing $14.6 billion and completed in 2019.
According to QNB forecasts, the state’s real GDP will grow from 3.3 per cent in 2016 to 3.9 per cent next year and 4.2 per cent in 2018 thanks to continued investment spending and initial production from Qatar’s new $10 billion Barzan gas project.
