Qatar economy expected to gain more traction this year on stronger fixed investment

Despite the ongoing Gulf crisis, Qatar’s economy is expected to gain traction this year on the back of stronger fixed investments.

The trend will be aided by the ongoing preparations for the 2022 World Cup and healthy global growth, according to a recent report by FocusEconomics.

In the report titled ‘Qatar Economic Outlook,’ FocusEconomics panelists forecast growth of 2.9% in 2018, unchanged from last month’s projection, and 2.7% in 2019.

The report said that despite the blockade, the economy was showing resilience this year despite. Non-residential central bank deposits were fairly stable in January after rising in December for the first time since last April, while recent bond and loan placements by QNB demonstrated foreign investors’ appetite for Qatari assets. 

Exports surged in January thanks to the hydrocarbon sector, with the trade surplus up over 50% year-on-year, while industrial production improved in December after two consecutive monthly contractions. 

In addition, following sharp price falls from June–November, the housing market appeared to stabilise in December. This comes after the third quarter (Q3) growth was boosted by a dynamic construction sector.

Nevertheless, FocusEconomics said the blockade "will weigh on the outlook" until a diplomatic solution is reached. 

Over the next two years, growth should be lifted by moderately higher oil and gas prices, while the new Barzan gas project will boost gas production by 1.4bn cubic feet a day.

It noted that despite the government’s concerted diversification efforts, oil and gas revenues still account for around half of GDP, some 90% of fiscal receipts and the bulk of exports, making the country ‘highly vulnerable’ to global price swings. 

However, Qatar has had a ‘softer economic landing’ than most other oil-exporting nations.

Prudent spending in the years leading up 2015’s price slump means the country’s breakeven oil price is substantially lower than the GCC average.