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Tribune News Network
Doha
Qatar's real GDP growth is expected to recover in 2017-18 with the non-hydrocarbon sector continuing to be the main driver of growth for a number of reasons, according to a report based on the analysis of QNB economics team.
Compared to 2016, QNB economics team expects a continued positive trend in oil prices in 2017-18, which should support a recovery in growth with the non-hydrocarbon sector as the main driver.
"The outlook for oil prices has improved markedly. Oil prices are currently hovering around $57 a barrel against the average of $47 a barrel in the third quarter of last year. We expect oil prices to continue rising to the $60 per barrel level if the production cuts recently announced by OPEC and non-OPEC are fully implemented," the report said.
Higher oil prices should boost government revenue and embolden capital spending plans as well as supporting sentiment, investment and consumer spending in the broader economy, the report added.
Government investment is expected to continue to drive growth, the report said adding that the government budget announced in December slated a 3.2 percent increase in capital spending for 2017 adding to a stock of QR374 billion in ongoing total project budgets in Qatar.
"Government investment should continue to attract workers to Qatar who will in turn require a range of services and increase aggregate demand in the economy," the report said.
The report said that the country's hydrocarbon sector is also expected to recover in the years to come.
Qatar's hydrocarbon sector recovered from a contraction of 2 percent year-on-year in the first half of 2016 to grow by 2.7 percent year-on-year in the third quarter of 2016, the report said.
"Data shows that crude oil production, which accounts for around one third of the hydrocarbon sector, moved in the opposite direction, rising in the first half and falling in 3Q. Natural gas and related liquids outweigh crude oil, accounting for two thirds of the hydrocarbon sector," the report said.
"We can, therefore, infer that the main driver of hydrocarbon GDP has been a dip in natural gas production in the first half of 2016 followed by a recovery in the third quarter.
"This is likely a result of routine maintenance carried out on some of Qatar's liquefied natural gas trains during the first half of the year, with production on these trains since recovering to capacity in third quarter," the QNB economics team said in the report.
