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Qatar’s Economic Outlook- Fall 2016

Growth has slowed further in Qatar. Both current account and fiscal balances are projected to have shifted into deficits during 2016, for the first in decades. In light of the uncertain medium-term outlook for the gas sector later this decade and beyond, the development of the non-hydrocarbon sector is critical.

Outlook
 
Qatar is projected to continue growing at a moderate pace. Qatar is in the second year of a US$200 billion infrastructure upgrade ahead of hosting the World Cup, which should support activity, particularly in construction, transport and services. GDP growth is projected at 2.1% in 2016, and should gradually rise 3.7% in 2018. Natural gas production has plateaued, and is expected to decline. However, the 1.4 billion cubic feet per day Barzan gas project – the last project approved before the North Field moratorium – is set for start in 2016 with full output expected in 2017. This should offset some of the anticipated production decline.
Fiscal and CA balances should gradually improve. As gas production increases and oil prices recover, export earnings should recover. The CA deficit will stay elevated during the forecast period, reflecting FIFA related capital imports before gradually narrowing to 3.2% of GDP in 2018. The fiscal deficit will narrow, also helped by savings in current expenditures and subsidy reforms, but is expected to remain large at close to 9% in 2018 (general government basis).

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