QEOUpdate20122013 English(Final)

7/30/2019 QEOUpdate20122013 English(Final)

1/42


2/42

Qatar Economic Outlook

20122013

Update


3/42

Copyright 2012 by the General Secretariat or Development Planning, Qatar.

Published December 2012.

General Secretariat or Development Planning, Qatar

Doha Towers

P.O. Box 1855

Doha, Qatar

www.gsdp.gov.qa

The content o this publication may be reely reproduced or non-commercial purposes with attribution to

the copyright holder.

DISCLAIMER: The views expressed in the Qatar Economic Outlook20122013 Update reect the proessional assessment

o sta members o the General Secretariat or Development Planning (GSDP). They do not necessarily represent the

ocial views o GSDP or o the State o Qatar. While every eort has been made to ensure the accuracy o all data and

inormation, GSDP accepts no responsibility or errors in sources or in their reporting. The data cut-o or this report was

5 December 2012.


4/42iii

Foreword

This Update to the Qatar Economic Outlook(QEO)2012

2013 o June this year revisits the orecasts presented hal

a year ago.

Spearheaded by the Department o Economic

Development, the General Secretariat or Development

Planning (GSDP) intends to publish QEO semi-annually,

submitting an outlook in the middle o the year and

updating it towards the end o that year. In launching

an Update, GSDP is responding to a growing demand

or data, analysis and commentary on contemporary

economic developments in Qatar.

The assessment in this Update broadly rearms the

perspective oered in June. The year 2012 marks a

watershed or Qatar, as the non-oil and gas sector now

accounts or most o the economys expansion. This

pattern will be repeated in 2013and or the oreseeable

uture. Recent data confrm that fscal revenues are

starting to diversiy more widely, a trend that will lead to

sustainable fnancial oundations or the uture.

Consumer price ination has edged up in 2012 and

is expected to accelerate some more over 2013. But

ination remains mild and is unlikely to present a

threat to macroeconomic stability. The authorities will

continue to deploy their regulatory powers to prevent

traders imposing unjustifed hikes on consumer prices.

The central bank has also been vigilant in managing

credit growth and has a ull armoury o eective tools

to manage domestic liquidity. Qatars banks are well

capitalised and strengthened prudential management

practices should protect their asset quality rom

deteriorating.

The main risks to the short- and medium-term outlook

come rom outside the domestic economy: should

geopolitics develop in a way that disrupts the ree

ow o gas and oil, the fnancial resources available

to the state will be aected. Nonetheless, under such

circumstances, Qatar could mobilise its reserves to shield

the economy against any external downdrat.

Other agencies were involved in writing this Update,

and I would thereore like to thank the Qatar Statistics

Authority, whose advise and provision o data was

invaluable; Qatar Central Bank; Qatar Petroleum; the

Ministry o Economy and Finance; and the Ministry o

Business and Trade or their generous cooperation,

sharing inormation and responding to requests or data

rom GSDP.

H.E. Dr. Saleh Al Nabit

Secretary General

General Secretariat for Development Planning

December 2012


5/42iv

Dr. Frank Harrigan, Director o the Department o

Economic Development, led the GSDP team. In the

department, inputs were provided by Dr. Issa Ibrahim,

Sylvie Maalou, Eugene McQuaid, Habib Millwala,

Dr. Osama Noujoum, Fidelis Sadicon and Ali Suleiman.

Research and administrative support was provided by

Hissa Ahmed Al-Assiry, Moza Al Jasmi, Haya Al Semaiti

and Jameela Hamad. Ali Suleiman coordinated thereports production.

Colleagues in the Department o Joint Services, led by

Hamad Rashid Al-Athba, and the Public Relations and

Communications Unit, led by Asma Nasrollah Mirzaei,

acilitated the production and launch o this Update.

Jonathan Aspin copy edited the report and designed

the layout. Ali Barazi translated the English version into

Arabic, which Saleem Betar prooread.

Acknowledgements


6/42v

Contents

Foreword iii

Acknowledgements iv

Qatar: Update at a glance 1

Part 1 Outlook or 2013 5

Update on Qatars outlook

Forecast methodology and assumptions

Capsule summary

GDP growth

Prices

Fiscal and balance-o-payments outlook

Risks

Consensus orecasts

Global economic prospects

Prospects or energy and commodity markets

Annex: Baseline assumptions

Part 2 Perormance in 2012 19

Economic growth

Prices

Interest rates, money supply and credit

Fiscal accounts

Trade and balance o payments

Terms o trade and the real eective exchange rate


7/42vi

Qatar Economic Outlook 20122013 Update

Tables

Table . Forecast assumptions

Table . Poll o economic orecasts or Qatar, and ()

Boxes

Box . A ocus on in part

Box . Revisions to real GDP data, and

Box . Summary o monetary, fnancial and institutional developments,

Box . Non-perorming loans are no cause or concern


8/42vii

Figures

Figure . Real GDP o GCC countries (year-on-year change, )

Figure . Capsule summaryRevisions to Qatars outlook or

Figure . Contributions to real GDP growth, (percentage points)

Figure . Share in GDP, ()

Figure . Export price o manuactures o advanced economies (year-on-year change, )

Figure . CPI and rentals (year-on-year change, )

Figure . Fiscal and current account balances, (various oil price scenarios, per barrel)

Figure . Global real GDP growth projections ()

Figure . Real GDP, eurozone and US ( prices, billion)

Figure . Regional real GDP growth ()

Figure . Regional annual ination ()

Figure . Crude oil and liquid uels global demand and supply (million barrels per day)

Figure . Average daily crude oil spot price ( per barrel)

Figure . Average crude oil price ( per barrel)

Figure . Natural gas price index ( = )

Figure . Natural gas prices ( per million British thermal units)

Figure . Non-uel commodity price index ( = )

Figure . Real GDP growth, hydrocarbons and non-hydrocarbons ()

Figure . Manuacturing growth ()

Figure . Construction growth ()

Figure . Population (million)

Figure . Contributions to real GDP growth (percentage points)

Figure . Nominal GDP growth, hydrocarbons and non-hydrocarbons ()

Figure . Quarterly GDP growth, nominal and real ()

Figure . Share o nominal GDP, hydrocarbons and non-hydrocarbons ()

Figure . Nominal GDP ( billion)

Figure . Monthly headline and core ination (year on year, )

Figure . Monthly ination (year on year, )

Figure . Producer price index growth ()

Figure . QE Index and S&P Global (year-on-year change, )

Figure . Gul Cooperation Council stock price indices (year-on-year change, )


9/42viii


Figure . Real estate rental rates, Doha (QR per square metre per month)

Figure . Policy rates ( per year)

Figure . Money supply (M)

Figure . Growth o commercial banks private sector credit (year on year, )

Figure . Growth o commercial banks public sector credit Figure . Loan-to-deposit ratio

Figure . Fiscal accounts (QR billion)

Figure . Fiscal expenditure ( o total)

Figure . Fiscal expenditure, FY/ (QR billion)

Figure . Fiscal revenue ( o total)

Figure . Fiscal revenue, FY/ (QR billion)

Figure . Fiscal balance(QR billion)

Figure . Current account components ( o nominal GDP) Figure . Foreign reserves (QR million)

Figure . Real eective exchange rate index


10/42

Qatar: Update at a glance

QatarUpdate at a glance

2012 a

2013 a

Real GDP growth () 6.3 . 4.8 .

Nominal GDP growth () 14.7 . 5.3 .

Consumer price ination () 2.0 . 3.5 .

Fiscal surplus ( o nominal GDP) 7.9 . 5.4 .

Current account surplus ( onominal GDP)

29.1 . 25.7 .

a = Forecast made in QEO in June .

Source: Estimates rom the General Secretariat or Development Planning.

Real GDP growth in 2012 is spearheaded

by non-oil and gas

The General Secretariat or Development Planning

orecasts that growth o real gross domestic product

(GDP) in 2012 will be 6.3%, little changed rom the

orecast made in the Qatar Economic Outlook (QEO)

20122013 released in June 2012. Robust expansion o

activity in the non-oil and gas sector has helped to

support overall growth in circumstances where gas

activity has started to level out.

In 2013, real GDP growth is expected to slow somewhat

as declining yields rom maturing oil felds will clip

growth in the hydrocarbon sector. Still, spurred by

construction activity and by continued vitality in

services, non-oil and gas activity will continue apace.

Thus overall growth o real GDP in 2013 is expected

to be about 4.8%, slightly more than orecast in QEO

20122013.

High oil prices have supported nominal

income expansion

Elevated oil prices beneft Qatar as they boost the

income available to pay or imports and to und

budgetary expenditure, and add to the countrys net

asset position. In 2012, the price o Qatars hydrocarbon

export basket was lited by higher average crude

oil prices, which provided a fllip to nominal incomeexpansion.

Nominal GDP growth in 2012 will exceed real GDP

growth and is expected to be about 14.7%. With an


11/42


expected all in crude oil prices in 2013, nominal GDP

growth will be more tightly linked to expansion in the

real economy.

Inrastructure investment is moving

ahead

Qatar is making real progress with its ormidable

pipeline o inrastructure investments that will run

through to 2020. These investments cover rail transport

(Doha metro, long-distance rail and reight, and the

Lusail people mover); roads (local roads, expressways

and the Doha crossing); drainage, wastewater and

sewage; anticipated investments in power and water;

and new stadiums and ancillary acilities or the 2022FIFA World Cup.

Although challenges in planning, coordination,

regulations (land acquisition and environmental

approvals) and logistics have slowed the initial tempo,

it has begun to pick up in the second hal o 2012.

Construction activity is now accelerating and is likely to

have been a major contributor to growth in the second

hal o the year.

In 2013, construction is expected to ratchet up

some more and expand at a double-digit pace. New

inrastructure projects will require many additional

workers to be hired, an inux that will provide a

stimulus to the wider economy.

Consumer price ination is edging up

While inationary conditions remain benign, 2012 has

seen an end to the rental price deation that started

in 2009. The rental index component o the consumer

price index bottomed out in April and May 2012, and

by August rents had climbed above their year-earlier

level, adding about 0.5 percentage points to headline

ination in 2012.

Core inationexcluding volatile components such as

rent and oodbegan to trend down in 2012.

In 2013, a larger population and the demands it places

on rental accommodation and other non-tradable

services are likely to add to consumer price ination,

but risks o rapid acceleration are low such that

ination is now put at 3.5% in 2013, slightly higher than

orecast in June.


12/42

Qatar: Outlook at a glance

Fiscal revenues are more diversied

Preliminary budget estimates or the frst hal o

FY2012/13 (to end-September 2012) suggest that Qatar

is well on track to meet its ull-year budget targets,despite the likelihood that spending, particularly on

capital assets, will pick up in the second hal o the

fscal year.

Sizeable revenue increases in the orm o taxes and

the transer o retained profts rom state-owned

companies boosted total revenue to end-September

and helped to diversiy its composition. Tax collection

was also lited by the introduction o a revised

corporate tax regime in 2011 and the continuing expiry

o tax holidays or some oil and gas joint-venture

partners.

Despite surging imports, external

surpluses remain strong

Qatars current account surplus in the frst hal o 2012 is

estimated at 20.4% o nominal GDP, and the ull year at

29.1%. Export earnings rom oil and gas have continued

to underpin the surplus and are expected to do so

again in 2013.

But import demand is on a strong upward trajectory:demand or the raw materials and capital equipment

needed to support Qatars inrastructure programme

has jumped and will continue to climb throughout

2013. As the population swells, demand or imported

consumer goods will also rise.

Qatar continues to run a defcit on its services and

income accounts. The current account surplus is

expected to be 25.7% o GDP in 2013.

Qatar has a good cushion againstshocks

The outlook or the global economy has deteriorated

since June. The International Monetary Fund has

revised down its growth orecasts or most major

economies and regions o the world.

Although eorts to shore up the vulnerable economies

o the eurozone have so ar averted renewed crisis,

robust structural remedies are yet to be agreed on and

pushed through.

In the United States, the clock is ticking with bipartisan

political agreement needed on a debt reduction


13/424


plan beore year-end, otherwise automatic large tax

increases and spending cutsthe fscal clicould

threaten the current ragile recovery.

In emerging Asia and other parts o the globaleconomy, the impact o lower demand in the advanced

economies has been transmitted to domestic economic

activity through weakened export demand.

Qatar would not be immune to urther setbacks in

the global economy, but any impact on its near-

term trajectory should not be large. Lower oil prices,

heightened investor risk aversion, asset price deation

and tighter global liquidity and fnancing conditions

would muddy its prospects a little but global shocks

unless catastrophicwould be unlikely to cause more

than a wobble in Qatar.

As shown in earlier QEOs, crude oil prices would have to

all a long way rom current levels to cause a signifcant

fscal dent. I demand or Qatars gas were to alter in

any particular market, the country has the exibility to

redirect its gas to other markets, and uses. Reassuringly,

Qatars banking system is strongly capitalised and its

fscal deences are solid.

Still, a major risk to Qatar is that an escalation o

geopolitical tensions could impair its ability to deliver

its cargoes o liquefed natural gas to client markets.

Heightened rictions close to home could also disrupt

routine economic activity and the successul roll-out o

the countrys substantial inrastructure programme.


14/425

Part Outlook or

Expanding by 9.6% in 2013, Qatars non-hydrocarbon economy will spearhead overall growth and

show a marginal gain rom the orecast made in Junes Qatar Economic Outlook(QEO)20122013.

Its growth will help to push real gross domestic product (GDP) to 4.8%, rom Junes orecast 4.5%.

Output in the oil and gas sector, however, ater years o blistering perormance, will edge lower, as

yields rom maturing oil elds decline and as gas activity saturates available processing capacity.

Consumer price infation is expected to step up in 2013, with a rising population creating pressure

on property rents, but it should remain contained at around 3.5%. Windall gains on the price o gas

in Japan are expected to underpin stout scal and balance-o-payments surpluses. And althoughuncertainties are yet to dissipate in advanced economies, Qatar has strong scal and nancial

deences that would help to shield it rom any downdrat.

Update on Qatars outlook

This QEO Update revisits the views o the General

Secretariat or Development Planning (GSDP) on Qatars

economic prospects or 2012 and 2013.

Part 1 presents revised orecasts or Qatar in 2013. (Part 2looks at 2012, introduced in box 1.1.) It updates the

outlook by accommodating GSDPs revised assessments

o the trajectories o the global economy and global

energy prices, and by incorporating a range o new

data on Qatars oil and gas, downstream-refning and

petrochemical activities. These orecasts also build on

recent data on the expected tracks both o major capital-

project outlays in Qatar and o government spending.

Prospects or the global economy have dimmed urther

since the last QEO, but Qatars outlook or 2013 is more

likely to be inuenced by domestic developments. Thescene is set by a large capital spending programme

on inrastructure, a growing population, an oil and gas

sector in which output has now peaked, and low interest

rates. With the completion o major investments in

upstream oil and gas activity, economic growth in Qatar

will move closer to the norm or countries in the Gul

Cooperation Council (GCCfgure 1.1).

A sharp all in oil and gas prices (transmitting any

renewed global economic dislocation) and adverse

geopolitical developments remain potential game

changers, but the baseline orecast assumes that theserisks do not materialise.

Box 1.1 A ocus on 2012 in part 2

Part 2 looks at perormance in 2012 and provides anupdated perspective on the QEO20122013 projections oJune 2012.

Actual outcomes will not be known until the end othe frst quarter o 2013, when Qatar Statistics Authority(QSA) releases national accounts data or the ullcalendar year. Thus part 2s estimates or 2012 are still inthe nature o orecasts, albeit orecasts that incorporateknown data or at least hal the year.

Both real and nominal GDP growth rates have beenrevised upwards, but only marginally (box fgure). Theorecast or consumer price ination (2012 year average)and the projected fscal surplus remain more or lessunchanged. A larger current account surplus is nowpenned in partly because o elevated liquefed naturalgas (LNG) prices or Qatars hydrocarbon export basket.

Revisions to Qatars outlook or 2012 (%)

6.3

6.2

0 5 10 15 20 25 30

QEO 20122013QEO Update

Current account

surplus(share of GDP)

Fiscal surplus

(share of GDP)

Consumer price

inflation

Nominal GDP

growth

Real GDP

growth

14.7

11.2

2.0

2.0

7.9

7.8

29.1

22.0

Source: GSDP estimates.

Click here for chart data
http://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_01.01.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_01.01.xls


15/426


Table 1.1 Forecast assumptions

Qatar

QCBs overnight deposit rate () . .

Qatari riyal/ exchange rate . .

Total budget spending (QR billion) . .

Current spending (QR billion) . .

Capital spending (QR billion) . .

External environment

Global growth () . .

US LIBOR, -year deposit () . .

Crude oil export price, per barrel (simple

average o spot Brent, WTI and Dubai Fateh)

. .

Trade-weighted natural gas price, per

million British thermal units

. .

Forecast methodology and assumptions

GSDP builds its QEO orecasts using a numerical

representationor rameworko the Qatari

economy. Using the latest available data it thencalibrates this ramework, which is consistent with

revised QSA estimates o outcomes in 2011. The

ramework makes ew behavioural assumptions

but embodies a ull set o economic accounting

relationships that provide internal consistency and

coherence across its dierent parts.

The revised 2013 orecasts o this partand the

updated 2012 estimates in part 2rely on assumptions

about the path o a number o key variables. The

relevant QEO orecast assumptions, or both years, are

set out in table 1.1.

The QEO orecasts are conditional in the sense that i

belies about the values taken by the variables o the

table were to change, it is probable that estimated

values o the variables explained by the ramework

such as real and nominal GDPwould also change.

However, the data are too ew to allow GSDP to apply

a modelling approach that would allow it to identiy

statistical confdence intervals or the orecasts.

Beyond that, views about risks and uncertainty have

been canvassed (Risks, below) and a perspective

provided on the extent o dissonance among expert

belies about economic prospects (Consensus

forecasts).

The picture presented in table 1.1 embodies a range

o expert opinions. In particular, GSDPs assumptions

about the trajectory o the global economy and its

constituent parts ollow those o the International

Monetary Fund (IMF) as set out in the World Economic

Outlook(WEO), released in October 2012.

Other views have also been canvassed, including

those o the World Bank on energy prices, the USEnergy Inormation Administration on the energy

outlook, the Organisation or Economic Co-operation

and Development (OECD) on general developments,

and the Asian Development Bank on prospects or

emerging Asia, particularly in China and India. The

annex provides more detail on methods.

Capsule summary

Figure 1.2 provides a snapshot o this Updates orecasts or

2013, compared with those oQEO 20122013.

Figure 1.1 Real GDP o GCC countries (year-on-year

change, %)

-10

-5

0

5

10

15

20

25

30

United Arab EmiratesSaudi ArabiaQatar

OmanKuwaitBahrain

2012201120102009200820072006

Source: IMF, WEO October database (http://www.im.org/external/pubs/

t/weo///index.htm), accessed November .Click here for chart data

Figure 1.2 Capsule summaryRevisions to Qatars

outlook or 2013

4.8

4.5

0 5 10 15 20 25 30

QEO 20122013QEO Update

Current account

surplus(share of GDP)

Fiscal surplus

(share of GDP)

Consumer price

inflation

Nominal GDP

growth

Real GDP

growth

5.3

4.7

3.5

2.5

5.4

4.8

25.7

20.6


http://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_01.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_02.xlhttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_02.xlhttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_01.xls


16/427

Part 1 Outlook for 2013

GDP growth

Real GDP growth is expected to be 4.8%, revised

marginally higher rom June. Among the underlying

components o GDP, the main contributory actor inthis upgrade is a smaller predicted decline in oil and

gas output0.2% versus 1.2%which stems largely

rom upward revisions to the projections o crude oil

volumes or 2013. Little or no growth in LNG production

is oreseen during the year, with all gas trains operating

at ull capacity, other than or maintenance.

The non-hydrocarbon sector is expected to grow

by 9.6% in 2013, a marginal (0.1 percentage point)

upwards revision on the June 2012 orecast. The orecast

contributions to GDP growth are shown in fgure 1.3.

By the end o 2013, service activity is expected to

contribute more than 60% o the total growth in Qatars

economy, and its share in total real GDP will have risen

to 32.5% (fgure 1.4), rom an expected 31.1% in 2012.

Further expansion is anticipated in fnancial services,

telecommunications and transportation, and other

service segments. Activity at the new Doha International

Airport is expected to ramp up in 2013 ahead o its

scheduled opening or passengers the ollowing year.

The share o industrymanuacturing, construction and

utilitiesin total output is also expected to continue

rising in 2013, to 19.8%, rom a projected 18.9% in 2012.

Within manuacturing (which covers refning,

petrochemicals, metals and non-metallic mineral

production) new iron-smelter acilities are due to come

on line, and urther growth is programmed or refning

and ertilisers. The Pearl GTL acility will also see its

output expand, and is expected to be running at near

ull capacity by the close o 2013.

Construction, too, is seen perorming strongly in 2013

about 10% growthreecting aster roll-out o Qatars

inrastructure pipeline and catch-up on earlier projectdelays.

Output o utilities (power and water), though just a

small component o total industrial value added, will

move in step with activity elsewhere in the economy

and with the likely continued rising trend o the resident

population (part 2).

The orecast or nominal GDP growth or 2013 has also

been revised up, to 5.3%; as in June, a little aster than

volume growth. An upward revision to the GDP deator

reects projected increases in the prices o services

and industrial output (primarily producer prices or

construction). Following downward revisions in the

orecasts or crude oil prices and or gas prices in 2013,

the deator or hydrocarbons has been reduced in

Figure 1.3 Contributions to real GDP growth, 2013

(percentage points)

Real GDP Nominal GDP-2

0

2

4

6

8

Services

Industry (manufacturing, construction and utilities)

Hydrocarbons

GDP

4.85.3

.

.

. .

-.

-.

Note: Data may not sum owing to rounding.



Figure 1.4 Share in GDP, 2013 (%)

.

.

.

.

.

.

0

20

40

60

80

100

Services

Industry (manufacturing, construction and utilities)

Hydrocarbons

Nominal GDPReal GDP

.

.

.

.

.

.


http://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_03.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_04.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_04.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_03.xls


17/428


Figure 1.5 Export price o manuactures o advanced

economies (year-on-year change, %)

2.5

-8

-6

-4

-2

0

2

4

6

8

20132012201120102009200820072006

5.66.2

-6.6

2.7

6.5

-0.3-0.5


t/weo///weodata/index.aspx), accessed November .


this revision rom the June orecast, but even then,

hydrocarbon output is expected to contribute over hal

o nominal GDP in 2013 (fgure 1.4 above).

Prices

Consumer price ination has accelerated somewhat

during 2012 but has stayed low in absolute terms, and is

expected to average about 2% or the year.

Much o what Qatar consumes is imported. The cost o

imported consumption will thereore depend on trends

in global prices and on movements in the nominal

eective exchange rate o the US dollar (to which the

Qatari riyal is pegged). Pass-through o changes in

oreign currency prices o goods to consumers in Qatar islikely to be comparatively ast and complete.

The expectation is that global commodity prices,

including ood, will all in 2013 (Prospects for energy and

commodity markets, below).

The IMF sees prices o manuactured exports rom

advanced countries also alling, in US dollar terms,

marginally (fgure 1.5). It is unlikely that prices o

manuactured goods produced in and exported rom

other regions will rise much, given global demand

weaknessand possibly urther deterioration. It is

expected that these dynamics will help to moderate

consumer price ination in the domestic economy.

No signifcant shit is anticipated in the eective

nominal exchange rate o the US dollar in 2013, although

currency values are notoriously dicult to predict. Still,

an unoreseen depreciation o the US dollar against

the currencies o Qatars trading partners would add to

inationary pressures.

The orecast o consumer price ination assumes that

there will be no change in the price o utilities or uel. But

other components, such as the costs o entertainmentand recreation or health services, could ace some

upside pressure with expanding demand rom a growing

population. However, these have a modest weight in

the overall price index and their impacts on headline

ination are expected to be slight.

The major swing actor in orecasts o consumer price

ination or 2013 is likely to be residential rents. By

October 2012 the rental index had already climbed

by 2.2% rom the lows recorded in May and June 2012

(fgure 1.6). (For a uller analysis, see part 2.) In the past,

the rental component o the consumer price index (CPI)has shown considerable volatility, and this has had a

signifcant pull on the path o overall ination. To an

extent, recorded movements in the rental component

Figure 1.6 CPI and rentals (year-on-year change, %)

-30

-20

-10

0

10

20

30

40

RentalsCPI

Q3

12

Q1

12

Q3

11

Q1

11

Q3

10

Q1

10

Q3

09

Q1

09

Q3

08

Q1

08

Q3

07

Q1

07

Q3

06

Q1

06

Source: QSA Qatar Inormation Exchange database (http://www.qix.gov.qa/),

accessed November .



18/429


o ination magniy the amplitude o true movements in

rents. This is because the index captures only changes in

the cost o new leases whereas, ideally, it should record

changes in the cost o all leases, new and existing.

Factoring in the likelihood o urther rises in rents but

moderate and possibly moderating ination in other

components o the CPI, the Update now expects ination

to average 3.5% in 2013, which is an upwards revision o

1 percentage point on the QEO 20122013 orecast.

Fiscal and balance-o-payments outlook

Qatar is again expected to deliver a stout fscal surplus

in 2013. The overall surplus (revenue less recurrent and

capital expenditure) is now put at 5.4% o the yearsorecast nominal GDP, a solid upward revision rom

thestill ample4.8% surplus in June.

The principal reason or this upgrade is a signifcant

upward revision in the orecast gas price or 2013 rom

mid-year. Japans decision to reduce its reliance on

nuclear energy has created heavy extra demand or gas

that has already caused prices to escalate in 2012 by at

least 30%. The revised 2013 orecast assumes that these

elevated prices will persist.

The uplit in expected hydrocarbon revenue in 2013 also

reects somewhat higher oil volumes than orecast in

June, as well as a technical adjustment to how the price

o Qatars hydrocarbon basket is calculated. The latter

means that, or given IMF benchmark prices o crude oil

and World Bank orecasts or natural gas components,

the GSDP methodology now estimates a higher price or

Qatars specifc hydrocarbon basket.

Estimates o government expenditure or calendar year

2013 have also been revised up. Budgeted outlays or

the current fscal year (FY2012/13) are now larger than

previously oreseen and it is assumed that this will be

echoed in steeper commitments beyond this year. Uplits

or recurrent and capital expenditures are now orecast

or 2013. Part o that or capital spending is linked to

previously delayed spending that is being carried

orward on major inrastructure investments, but costs

could possibly rise or some projects. Forecast gains to

revenue in 2013 more than cover the additional outlays

now anticipated.

The non-hydrocarbon fscal balance (which subtracts

direct contributions o hydrocarbon income to revenue

rom the overall balance) will remain in defcit. Although

non-hydrocarbon sources o government revenue are

rising, the bulk o revenue in 2013 (and over the medium

term) will accrue rom hydrocarbon activity. In 2013, the

non-hydrocarbon defcit, adjusted to remove investment


19/42


income and taxes rom hydrocarbon enterprises, is

expected to be 20.8% o nominal GDP.

The current account o the balance o payments is

seen posting a surplus o 25.7% o nominal GDP in 2013,despite a likely surge in import spending, mainly on

materials and capital equipment. Heavier remittance

outows, too, are anticipated, with an increase in the

expatriate workorce. The upward revision to estimated

earnings rom hydrocarbon exports outweighs

additional outows, however.

Risks

The risks aced by Qatars economy have not materially

changed since the assessment given in mid-years QEO.The main risks still emanate rom the international

economy. Reductions in crude oil prices and more

dicult conditions in international credit and debt

markets would be the main mechanisms through which

Qatar would eel global economic dislocation.

Domestically, ination is on a mildly upward trajectory,

and the authorities remain vigilant. Qatar Central Bank

(QCB) has mitigated risks through active credit and

liquidity management, just as it has made strenuous

eorts to ensure that the requirements o Basel III are met,

thus helping to strengthen the position o Qatars banks.

In the real economy, risks o disruption to business and

economic lie presented by large inrastructure works

including rail, roads and drainageare now being

addressed through new planning and institutional-

coordination initiatives. These measures success will

be vital to ensuring that new inrastructure assets are

delivered on time and that they generate promised

benefts.

Geopolitical concerns support currently elevated prices

or crude oil, but demand and supply undamentalsas

well as still considerable uncertainty about the global

economic outlooksuggest that prices could yet soten.

And as the price o Qatars hydrocarbon basket is tightly

linked to those or crude oil, a retreat in the latter would

reduce the resources that the state has at its disposal.

Yet GSDP calculations suggest that the price o crude

oil would have to all sharply, to below $50 per barrel,

to shit the projected fscal surplus or 2013 into defcit,

holding planned spending and other actors fxed

(fgure 1.7). But with projected increases in government

outlays beyond 2013, a protracted period o lower oil

prices would underline the importance o eorts to

mobilise non-hydrocarbon revenue. The balance-o-

payments current account would, though, remain frmly

in surplus, even with prices well below $50.

Figure 1.7 Fiscal and current account balances, 2013

(various oil price scenarios, per barrel)

-5

0

5

10

15

20

25

30

$50$75$100$109.1 (baseline)

Current account surplus (% of GDP)Fiscal surplus (% of GDP)

5.44.4

1.8

-1.2

25.7

23.4

17.0

10.0


http://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_07.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_07.xls


20/42


Consensus orecasts

As in earlier QEOs, GSDP has polled third-party orecasts

to provide a representative view o prospects. Revisions

to these orecasts are revealing both about likely trendsand about the confdence with which belies about

economic prospects are held. This section discusses both

2013 and 2012.

Consensus estimates are calculated or real and

nominal GDP growth as well as consumer price ination

(table 1.2). Few sources regularly report data on other

indicators o interest. Some o the sources are yet

to revise the estimates reported in QEO 20122013

(published in June 2012), shown in red. In these cases, it

is assumed that there has been no revision in the belies

held by the orecasters.

It is unsurprising that the consensus estimates or 2012

(called December estimates or convenience) tend to

adhere more closely to outcomes that have been partly

Table 1.2 Poll o economic orecasts or Qatar, 2012 and 2013 (%)

Economic orecaster Real GDP growth Nominal GDP growth Ination

Bank o America Merrill Lynch (Aug ) . . . .

Business Monitor International (Jul ) . . . . . .

Citigroup (Oct ) . . . . . .

Deutsche Bank (Jun ) . .

Economist Intelligence Unit (Oct ) . . . . . .

EFG Hermes (Mar ) . .

Emirates NBD (Oct ) . . . . . .

HSBC (Nov ) . . . . . .

IBQ-NBK Joint report (Jul ) . . . . . .

IHS Global Insight (Nov ) . . . . . .

Institute o International Finance (Apr ) . . . . . .

IMF (Oct ) . . . . . .

KAMCO Research (Sep ) . . .

Oxord Economics (Oct ) . . . . . .

Qatar National Bank (Oct ) . . . . . .

Roubini Global Economics (Feb ) . .

SAMBA (Sep ) . . . . . .

Shuaa Capital (Jan ) . . .

Standard Chartered (Apr ) . . . .

TAIB Securities (Mar ) . . . .

Consensus (mean) . . . . . .

Median . . . . . .

High . . . . . .

Low . . . . . .

Standard deviation . . . . . .

Coecient o variation () . . . . . .

Consensus (mean) orecasts revised ater Junea

. . . . . .

Coecient o variation () . . . . . .

Memo item: Consensus (mean) June . . . . . .b

... = not available.

a Calculates the consensus mean, stripping out orecasts that have not been revised since June (in red). b Corrigendum: Discrepancies in infation orecasts or reported in June

have been corrected in this table.

Note: The World Bank and other orecasters that quote WEO and other secondary sources have been removed rom this table.

Source: Consolidated rom various reports and news articles.


21/42


realised, which include estimates o frst-hal real and

nominal GDP (through to June) and o consumer prices

(through to October).

For 2012 (part 2 provides a uller discussion o GSDPsperspective), most orecasts o real GDP growth released

in the second hal o the year are lower than those in

the frst, and the mean is 6.5%, down rom the orecast

7.4% in Junes QEO. Vice versa or nominal GDP, where

the consensus is revised up rom 7.7% to 9.5%. For

consumer price ination, there is a tendency or the

earlier orecasts to be higher than those made later in

the year, and the consensus orecast is cut by nearly a

ull percentage point rom 3.4% (June) to 2.5%. These

revisions would be accentuated i orecasts that have not

been revised since June are removed rom the sample.

The revisions made to consensus orecasts rom June

to December move the consensus orecasts closer to

the GSDP estimates o June 2012, or all three indicators.

Still, as at mid-year, the GSDP orecasts or 2012s real

GDP growth and consumer price ination remain below

consensus and its orecast or nominal GDP growth

above consensus (part 2).

As observed in earlier QEOs, the dispersion o estimates

(as measured by the coecient o variation) around

the consensus is quite large. Surprisingly perhaps,

Decembers revised consensus estimates show noevidence o a convergence in views among those

polled or 2012nor indeed or 2013, which shows less

agreement about the outlook or real and nominal

income growth, suggesting greater uncertainty about

the uture.

For 2013, GSDPs expectations are that real and nominal

GDP growth will be somewhat lower than the consensus

estimates, but the dierence is less than one standard

deviation or both indicators. Its views on consumer

price ination in 2013 and those o the consensus are

very similar.

Global economic prospects

In the WEO o October 2012, the IMF downgraded its

orecast or 2012s global economic growth to 3.3%, a

decrease o 0.2% rom its April and July 2012 predictions.

Hopes or global recovery in 2013 have continued to

dim (fgure 1.8). These disappointing outcomes and the

latest downgrades to orecasts stem rom inadequate

policy responses to structural fnancial problems in

the eurozone, a fscal stand-o in the US and pervasiveuncertainty that has inhibited private sector spending in

advanced countries.

Figure 1.8 Global real GDP growth projections (%)

3.5 3.53.3

0

1

2

3

4

5

Oct 12Jul 12Apr 12

20132012

4.13.9

3.6


t/weo///index.htm), accessed October .



22/42


Within the global average or 2013, the IMF has taken

down growth rom April in all major regions, with

the largest revisions in the eurozone and Asiaeach

0.7 percentage points.

The eurozone re-entered recession in the third quarter o

2012, having seen two consecutive quarters o declining

output (fgure 1.9), leaving real output no higher than at

the start o 2007. Austerity programs have hit demand

hard in debt-stricken, peripheral countries and activity

is now beginning to suer in the core economies o

Germany and France.

While the outlines o a solution to the blocs fnancial and

debt crisis are beginning to orm, proposed responses,

including a banking union, will take time to push

through. Over the medium term, structural measuresthat address chronic defcits in competitiveness

will be needed to get ailing countries back to work

(unemployment in the eurozone stands at 11.6% as o

September 2012 and in Greece and Spain it tops 25%)

and to repair their broken balance sheets.

In the US in contrast, real output has continued to grow

since the end o its recession (in the second quarter

o 2009), although post-recession perormance has

been the weakest o any since World War 2. In act, the

sluggish road to recovery resembles what happened

in the atermath o other systemic fnancial crisesinternationally and in an earlier epoch o US economic

history.

A proximate explanation or the weak recovery rom

the 2007 recession lies in the role that the collapse in

the US housing market and household deleveraging

played in precipitating and then propagating the crisis.

In past episodes o recovery, housing investment has

typically helped lead the way out o recession. On this

occasion, a sclerotic US housing market in which values

have plunged has obstructed recovery. A comparatively

muted fscal response and weak consumer spending(weighed down by housing debt, a weak labour market

and depressed earnings) have also played a part.

Recent data releases suggest that progress will remain

tentative, although job growth and signs o a recovery

in the US housing marketwith house prices rising

in September 2012 and a range o indicators showing

renewed residential building activityare positive signs.

The October WEO expects US growth to be 2.2% in 2012,

slowing to 2.1% in 2013 (fgure 1.10).

Yet a major question mark exists as to whether the US

Congress can reach agreement on a defcit and debt

reduction programme beore the end o 2012. Failure

to reach agreement would result in sharp tax rises and

deep spending cuts (the so-called fscal cli) that could

Figure 1.9 Real GDP, eurozone and US (2005 prices,billion)

2,000

2,020

2,040

2,060

2,080

2,100

2,120

2,140

2,160

2,180

2,200

2,220

12,200

12,400

12,600

12,800

13,000

13,200

13,400

13,600

13,800

USEurozone

Q3Q1

2012

Q3Q1

2011

Q3Q1

2010

Q3Q1

2009

Q3Q1

2008

Q3Q1

2007

Q3Q1

2006

$

Note: The eurozone has 7 countries: Austria, Belgium, Cyprus, Estonia, Finland,

France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands,

Portugal, Slovakia, Slovenia and Spain.

Sources: Eurostat database (http://epp.eurostat.ec.europa.eu/portal/page/

portal/statistics/serach_database#) and US Bureau o Economic Analysis

(http://www.bea.gov/iTable/iTable.cm?ReqID=&step= #), accessed

November .


Figure 1.10 Regional real GDP growth (%)

-2

0

2

4

6

8

131211131211131211131211131211

1.4

-0.4

0.2

1.82.2 2.1

-0.8

2.2

1.2

7.8

6.7

7.2

3.3

5.3

3.6

MENADeveloping

Asia

JapanUSEurozone





23/424


derail what is still a ragile recovery. The WEO projections

assume that a compromise is reached that avoids

harmul fscal tightening.

In Asia, growth in China has slowed owing to theknock-on eects o sluggish global demand, tightening

domestic credit conditions and public spending

restraint. In India, too, growth has decelerated; higher

interest rates, aimed at stemming ination, have

weakened business confdence. Octobers WEO sees

growth in developing Asia o 6.7% in 2012, picking up to

7.2% in 2013.

In the third quarter o 2012, Japan slipped back into

recession as its fscal austerity measures began to bite

and the transitory boost to economic activity given by

reconstruction eorts ollowing the devastating tsunamio 2011 aded.

Closer to home, the WEO revised up its GDP growth

orecast or the Middle East and North Arica (MENA) to

5.3% or 2012, rom 4.2% in Aprils WEO. The gap between

oil exporters and oil importers within the region has

continued widening, with exporters benefting rom

elevated crude prices. In 2013, growth in MENA is

expected to slow to 3.6% (as against a 4.6% orecast

in the April WEO), largely because prospects or oil-

exporting countries are expected to narrow with lower

oil prices that year.

On the ination ront, in a context o weak global growth

and muted demand, the IMF expects that pressures will

generally soten in both 2012 and 2013 (fgure 1.11).

Prospects or energy and commodity

markets

Oil prices

An uncertain outlook or the global economy is casting

a shadow over energy and commodity markets. The

International Energy Agency has cut its short-term

orecasts or global oil demand and predicts anaemic

growth in crude oil demand until the second hal o 2013.

Supplies rom non-OPEC sources, including North

America, have continued to build and urther growth

is expected in 2013. OPECs supply has been buttressed

by aster than expected recovery in Libyan production,

expanding Iraqi output and new peaks in Saudi Arabian

supplies, while Iranian exports remain constrained. Thus

or the rest o 2012 and 2013, global production should

roughly match demand (fgure 1.12).

Spot oil prices generally ell in late October and early

November 2012 (fgure 1.13). (Futures prices have also

Figure 1.12 Crude oil and liquid uels global demand

and supply (million barrels per day)

81.0

82.5

84.0

85.5

87.0

88.5

90.0

91.5

Consumption Production

Oct

13

Jul

13

Apr

13

Jan

13

Oct

12

Jul

12

Apr

12

Jan

12

Oct

11

Jul

11

Apr

11

Jan

11

Forecast

Source: US Energy Inormation Administration, Short-Term Energy Outlook database

(http://www.eia.doe.gov/steo/c_query/index.cm), accessed November .


Figure 1.11 Regional annual ination (%)

2.72.3

1.6

3.1

2.01.8

-0.3

0.0

-1.3

2.72.3

1.6

9.7

10.4

9.1

MENADeveloping

Asia

JapanUSEurozone

-2

0

2

4

6

8

10

12

131211131211131211131211131211

Source: IMF WEO October database (http://www.im.org/external/pubs/



Figure 1.13 Average daily crude oil spot price ($ per

barrel)

110.0

86.5

75

85

95

105

115

125

135

US WTIUK Brent

4 Nov

12

5 Oct

12

5 Sep

12

6 Aug

12

7 Jul

12

7 Jun

12

8 May

12

8 Apr

12

9 Mar

12

8 Feb

12

9 Jan

12

Source: US Energy Inormation Administration, Short-Term Energy Outlook database

(http://www.eia.doe.gov/steo/c_query/index.cm), accessed 7 November .

http://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_12.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_11.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_13.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_13.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_11.xlshttp://www.gsdp.gov.qa/portal/page/portal/gsdp_en/media_center/news_listing/manage_missilanous_files/QEOUpdate20122013_Fig1_12.xls


24/425


allen.) In its October 2012 WEO, the IMF expected the

2012 annual average oil price to be marginally above

2011s at close to $106, coming down a little to just over

$105 in 2013 (fgure 1.14). These pricesthough still

elevated and likely to act as a drag on recoveryarelower than the IMF orecast in April, but higher than its

revised orecast o July. Price volatility is likely to stay

a eature o the market given lingering economic and

geopolitical uncertainties.

Gas prices

The WEO (October) projected average natural gas

pricesa weighted average o Japanese, US and

European pricesto increase by 10.7% in 2012 and 2.8%

in 2013 (fgure 1.15). Gas continues to be sold at prices arbelow its energy equivalent parity with oilin eect, at

a discount to oil.

Given the hety discount on gas-uelled energy,

consumers are increasingly likely to invest in gas- rather

than oil-burning equipment in non-transport uses. Bright

prospects or gas demand, including the likelihood o

continuing growth in China and Indias appetite or gas,

are expected to eventually exert upward pressure on

gas prices, but no signifcant adjustments are seen in the

short term, and impacts will probably continue being

regionally dierentiated.

The global market in gas remains highly segmented,

with prices across major regions diverging (fgure 1.16).

The gap between Japanese prices and Henry Hub

prices (in the US) widened in August 2008 and more

signifcantly again rom July 2011 through the frst

hal o 2012, albeit with a slight reversal in the trend in

September and October.

Recent price dynamics have been dominated by regional

developments. In the US, ast-expanding supplies o

unconventional (shale and lean) gas have driven down

prices. But in Asia, the vast majority o trades are linked

to the price o crude oil, and a liquid hub market that

reects natural gas supplydemand balances (gas

on gas pricing) is yet to orm. Options or Asian LNG

hubs are being considered in the Republic o Korea,

Shanghai and Singapore. Asian regulatory, fnancial and

inrastructure challenges will take time to overcome but

are not insurmountable.

Non-energy commodity markets

Depressed global demand conditions havereverberated in non-energy commodity markets.

The IMF (WEO, October 2012) sees a all in non-uel

commodity prices o 9.5% in 2012 relative to 2011 and a

Figure 1.14 Average crude oil price ($ per barrel)

64.3

Forecast

-40

-20

0

20

40

60

80

100

120

GrowthAverage crude oil price

20132012201120102009200820072006

71.1

97.0

61.8

79.0

104.0106.2 105.1

20.5

20.520.520.520.520.5-1.0

10.7

2.1

31.627.9

-36.3

36.4

Note: Average crude oil price is the simple average o three spot prices: dated

Brent, WTI and Dubai Fateh.


t/weo///weodata/index.aspx, accessed November .


Figure 1.15 Natural gas price index (2005 = 100)

Forecast

-40

10

60

110

160

210

GrowthIndex

20132012201120102009200820072006

15.3

1.4

48.6

-36.9

36.2

10.72.8

115 117

174

110 113

154

171 175

3.4

Note: The index includes European, Japanese and US indices.




Figure 1.16 Natural gas prices ($ per million Britishthermal units)

0

2

4

6

8

10

12

14

16

18

20

LNGJapanEuropeUS Henry Hub

Oct12

Jan12

Apr11

Jul10

Oct09

Jan09

Apr08

Jul07

Oct06

Jan06

Source: World Bank Commodity Markets database (http://econ.worldbank.org/

WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/,,contentMDK:77~me

nuPK:7~pagePK:~piPK:~theSitePK:7,.html),

accessed November .



25/426


urther drop o 2.9% in 2013 (fgure 1.17). The non-uel

commodity price index ell by about 1.6% between

September and October 2012, as the ood sub-index

declined by 4%. While short-run disruptions to supply,

say caused by adverse weather events, may continue toaect ood prices, utures markets expect ood prices to

come down urther in 2013.

For metals, the prospect o stronger demand in China

and other emerging economies is expected to support

demand, and utures markets are anticipating price rises,

though the IMF is predicting urther alls in 2013.

Figure 1.17 Non-uel commodity price index (2005 = 100)

Forecast

100

120

140

160

180

200

220

Industrial (agric. raw materials and metals)

FoodNon-fuel

20132012201120102009200820072006

136

154

146

119

198

170

161

168

123

190

151

127

141

161

167172

110

127

157

136

172

176

181

152





26/427


Annex: Baseline assumptions

New data releases as well as revisions to 2010 and

2011 base-year data are used to update the orecast

assumptions. (In September 2012, QSA released revisions

confned to the non-hydrocarbon sectorto the national

accounts or these two years.) The base-year accounts, as

revised, are aligned with actual data and then projected to

2012 and 2013.

Assumptions about the global economy draw on the IMFs

WEO o October 2012.

Qatars realised hydrocarbon prices, both oil and gas, are

incorporated in the baseline. The oil price orecasts rom

the October WEO are adopted to orecast Qatars crude

oil export prices in 2012 and 2013. (The price is the simple

average o three spot prices: Brent, WTI and Dubai Fateh.)

Gas prices or three marketsEurope, Japan and theUSare taken rom the World Banks September 2012

commodity price orecasts and are used to produce a

trade-weighted average gas price, with Qatars 2010 export

volumes as the weights.

The most recent data rom ocial national sources are

used to construct Qatars macroeconomic accounts. Actual

outcomes or the frst hal o 2012 are used to calibrate

the orecasts. They include data on the national income

accounts rom QSA (released in September 2012) and on the

balance o payments rom QCB (released in October 2012),

as well as preliminary data or FY2012/13 rom the Ministry o

Economy and Finance (MOEF) (as o September 2012).Output is measured using the value-added approach

recommended by the United Nations System o National

Accounts. Value-added ratios o economic sectors align

with QSAs ratios.

Qatar Petroleum has provided updated data on output

volumes in the hydrocarbon economy, both upstream

(crude oil, liquefed natural gas, condensates and natural

gas liquids) and downstream (refned petroleum products,

GTLs, ertilisers and other petrochemicals). These data

anchor export estimates.

The investment profles or 2012 and 2013 are estimatedrom updated inormation on project costs and

assumptions about disbursement profles, an approach

unchanged rom QEO 20122013 in June.

Fiscal outcome estimates are expressed in calendar year.

The estimates reect spending inormation rom MOEFs

budget estimates or FY2012/13 (AprilMarch); MOEFs

estimates o non-oil and gas revenue; and GSDPs estimates

o oil and gas revenue based on expected oil price

outcomes (rather than the price used in budget planning

assumptions). Actual fscal outcomes in the frst hal o

FY2012/13 are used to fne-tune the orecasts.

Estimates o consumer price ination are anchored on,among others, trends in global commodity prices, expected

movements o nominal eective exchange rates, prospects

or population growth, and conditions in the local housing

rental market.


27/428



28/429

Part Perormance in

Economic growth

Real GDP

Quarterly estimates o real GDP rom Qatar Statistics

Authority (QSA) indicate that Qatars economy expanded

by 6.4% in real (volume) terms during the frst hal o

2012, measured year on year against the same period o

2011 (fgure 2.1). Although this hal-year outcome is close

to the ull-year orecast o 6.2% made by the General

Secretariat or Development Planning (GSDP) in its Qatar

Economic Outlook(QEO) 20122013 o June 2012, second-

quarter output growth slowed sharply: real GDP grew by

5.1% in that quarter, down rom 7.9% in the frst.

Late commissioning o some fnal additions to liquefed

natural gas (LNG) capacity lited output by 2.7% in the

frst hal o 2012 relative to the same period in 2011. But

there was no growth in the second quarter rom the frst,

with oil and gas output registering a slight decline.

A profle o at gas production and marginally declining

oil production (which includes crude oil, condensates

and natural gas liquids) is set to continue over the near

term. No additional gas production will occur until the

Barzan project comes on line, still expected in 2014. In

the short term, crude oil production will recede as yields

rom maturing felds decline. Expected investments in

the urther development o existing felds (particularly

Dukhan) may lit uture oil output, but impacts will not

be seen until beyond 2015. Little growth is expected in

the production o condensates and natural gas liquids in

the near term.

Qatars non-oil and gas economy has picked up the reins o growth this year. Expansion there is

broad based, buttressed by accelerating inrastructure investment. Construction, transport and

communications, and nancial services have all grown ast, as has manuacturing, which includes

downstream rening and petrochemical activities. The non-oil and gas economy is likely to rise by

about 9.3% over the ull year, accounting or the bulk o the orecast 6.3% expansion in real GDP,

and helping Qatars economy in nominal terms to reach a shade under $200 billion by year-end.

Headline consumer price infation is still tame, but towards the close o the year it has begun to

edge up, uelled partly by an end to rental price defation. Qatars surplus on the current account

o the balance o payments remains sizeable, supported by avourable prices or hydrocarbon

exports. And despite hety budget increases in recurrent and capital expenditures, an uplit in

revenue will keep the overall scal surplus healthy.

Figure 2.1 Real GDP growth, hydrocarbons and

non-hydrocarbons (%)

9.8

23.2

0

5

10

15

20

25

Non-hydrocarbonsHydrocarbonsGDP

H1 2012H2 2011H1 2011

2.7

9.3 9.5

11.7

15.6

10.6

6.4

Note: Hydrocarbons include crude oil and gas extraction under mining and

quarrying.

Source: GSDP estimates based on QSA release dated September

(http://www.qsa.gov.qa/eng/index.htm).



29/42


Figure 2.3 Construction growth (%)

8.0

-0.6

11.3

-2

0

2

4

6

8

10

12

H1 2012H2 2011H1 2011




The non-oil and gas sector perormed strongly in the

frst hal o 2012, rising by 9.5% rom the same period in

2011. But its year-on-year growth in the second quarter

slipped to 8.5% rom 10.6% in the frst.

Qatars manuacturing expanded by a solid 11.1% in

the frst hal o 2012 (fgure 2.2). In volume terms, about

56% o manuacturing activity is accounted or by the

production o refned productsincluding gas-to-liquid

products, or GTLsand o petrochemicals. Both are

tied to upstream oil and gas activity through processing

o eedstock inputs, namely crude oil, lean gas and

condensates.

Much o the manuacturing expansion in the frst

hal reected the availability o additional eedstock

and continued addition to capacity at Pearl GTL. Themanuacturing subcomponent o basic chemicals, which

includes GTLs, climbed by almost 100% in the frst hal o

2012. Within petrochemicals, ertiliser production posted

strong growth o about 23% ollowing recent expansion

o capacity to produce urea and ammonia.

Qatar also produces modest quantities o iron, steel and

aluminium. Output in this subsector also stepped up in

the frst hal. Rubber, plastic and other chemical products

likewise posted strong growth.

Utilities (electricity and water) grew at close to 10%

in the frst hal o the year. Rising demand or power

was supported by broader growth in the economy,

particularly in energy-intensive areas such as refning

activity, chemicals and metals. An expanding population

(fgure 2.4 below) added to demand or both water and

power.

The strong perormance in other parts o the non-oil

and gas economy in the frst hal o 2012 was broad

based. Transport and communications led the advance,

growing by over 15% compared with the same period

in 2011. Continuing investments in inormation and

communications technology and Qatar Airways

expansion programme helped to underpin the strong

perormance. The margins earned on shipments o

Qatars LNG cargos also spurred activity in this sector.

As the year progressed, construction activity picked up.

Growth o 8.0% in the frst hal (fgure 2.3) was driven by

strong expansion in the second quarter. Spending on

inrastructure began to gather some momentum in the

frst hal and investments continued in large real estate

developments, including Lusail, Pearl, Mushereibs Heart

o Doha, and Barwas Financial District.

By mid-year 2012, Qatars total population had risen to

1.72 million, an increase o just over 6% rom one year

earlier (fgure 2.4). The 12-month moving average trend,

Figure 2.4 Population (million)

1.69

1.40

1.45

1.50

1.55

1.60

1.65

1.70

1.75

1.80

1.85

1.90

Trend line:

12-month moving average

Nov12

Sep12

Jul12

May12

Mar12

Jan12

Nov11

Sep11

Jul11

May11

Mar11

Jan11

1.72

1.76

1.85

1.76

Source: QSA Population Structure Archive (ht tp://www.qsa.gov.qa/eng/PS-

Archive.htm), accessed December .


Figure 2.2 Manuacturing growth (%)

9.9

11.1

5.9

0

2

4

6

8

10

12

H1 2012H2 2011H1 2011





30/42

Part 2 Performance in 2012

Figure 2.5 Contributions to real GDP growth(percentage points)

0

2

4

6

8

10

12

14

16

18

ServicesConstructionElectricity and water

ManufacturingHydrocarbonsReal GDP

H1 2012H2 2011H1 2011

15.6

10.6

6.4

.

.

.

..

.

.

.

.

.

.

Note: Hydrocarbons include crude oil and gas extraction under mining

and quarrying. Services include transport and communications, trade and

hospitality, nancial, government, household and social services.




which removes seasonal and other transitory inuences,

shows that Qatars population is once again on a rising

trajectory.

To meet the demands created by an expandingpopulation, service activity expanded in the frst hal,

with most subsectors growing at 79%. Financial services

stepped up to meet expanding credit needsboosted

by higher marginswhile the government continued

to allocate a large portion o budgetary expenditure to

education and health. Figure 2.5 illustrates the extent to

which overall growth in the economy is now dependent

on services and non-oil and gas activity: in the frst six

months o 2012, services accounted or over hal the

aggregate growth in the economy.

In June 2012, QEO 20122013 estimated that GDP growthor the ull year would average 6.2%. Based on observed

perormance in the frst hal, and updated inormation

on expected developments in key sectors or the rest o

2012, real GDP growth or the ull year is now expected

to be 6.3%, little changed on the earlier orecast. This

updated projection incorporates revised QSA estimates

o historical GDP and its sector allocation (box 2.1).

The second hal o 2012 will probably see oil output

tapering o, but gas production continuing to expand.

The net eect will be to add marginally to the stimulus to

growth that oil and gas provided in the frst hal, takingreal growth in oil and gas to 3.4% or the ull year.

Growth in the non-oil and gas sector in the second hal

will be inuenced by a variety o actors, some o which

lit growth with others causing it to moderate.

Although manuacturing output will continue to pick

up, its pace may slow. Other actors, too, could restrain

growth in the second hal. By the close o the year, the

stimulus that some sectors elt with the large rise in

Box 2.1 Revisions to real GDP data, 2010 and 2011

Estimates o real GDP growth are based on nationalincome accounts measured in 2010 prices (the baseyear). Latest QSA national accounts estimates, releasedin September 2012, revise down aggregate GDP fguresor 2010 and 2011. Revisions were confned to the non-hydrocarbon sector.

For 2010, estimates o manuacturing and services output(trade and hospitality, transport and communications,and fnance) were lowered. Construction was revised up,however. For 2011, the downward revision was largely in

services, particularly fnance.

The latest GDP orecasts reported in this Update usethe revised QSA national accounts estimates or 2011 astheir base.


31/42


salaries and emolumentsgiven to citizens working in

government and the militaryin September 2011 will

have worn o.

But other actors at play should support growth.The pace o construction activity is expected to pick up

with mobilisation and enabling works now under way or

major inrastructure projects, including the Doha metro.

In addition, the resident population continues to

increase. As o November 2012, Qatar had 1.85 million

residents, a signifcant jump over the mid-year

population and the corresponding number one year

earlier (fgure 2.4 above).

While many o the new arrivals are lesser skilled

workerseach placing limited (and ultimatelytemporary) demands on local servicesthe large

absolute increase in the worker headcount will

nevertheless lit the overall demand or services.

Qatars hosting o the United Nations Climate Change

Conerence in late November and early December, too,

will have lited activity in services.

This Update pegs ull year growth in the non-oil and gas

economy at 9.3%, a shade lower than the outcome in the

frst hal.

Nominal GDP

Measured in nominal or value terms, GDP expanded by

17.8% in the frst hal o 2012 (fgure 2.6). As explained

in earlier QEOs, measures o nominal income may

provide a better picture o the resources available to the

country in circumstances where terms o trade change,

particularly the price received or Qatars output basket

o hydrocarbon exports.

First-quarter growth o 24.3% was ollowed by a more

moderate 11.9% in the second (fgure 2.7). The gap

between real or volume growth and nominal growthis explained by changes in the price o Qatars output

basket, particularly by gains in prices o hydrocarbons

and petrochemicals.

Higher international prices or crude oil, to which the

price o Qatars hydrocarbon basket is closely tied,

lited income in the oil and gas sector. In nominal

terms, output o oil and gas rose by over 17% in the

frst hal, compared with a volume expansion o just

2.7%. Manuacturing, in which downstream refning

and petrochemical activity eatures prominently, also

benefted rom higher prices, with nominal outputclimbing by 21.7% against volume expansion o 11.1%.

A second actor in nominal income growth was a

ramp-up in the output o government services, which

Figure 2.7 Quarterly GDP growth, nominal and real (%)

27.7

0

10

20

30

40

50

RealNominal

Q2 2012Q1 2012Q4 2011Q3 2011Q2 2011Q1 2011

11.9

24.3

33.9

40.1

42.9

10.6

20.6

14.4

6.97.9

5.0

Source: GSDP estimates based on QSA release dated September (http://www.qsa.gov.qa/eng/index.htm).


Figure 2.6 Nominal GDP growth, hydrocarbons and


55.6

49.0

17.4

14.8

23.1

18.4

0

10

20

30

40

50

60

Non-hydrocarbonsHydrocarbonsGDP

H1 2012H2 2011H1 2011

35.2

36.9

17.8


quarrying.





32/42

Part 2 Performance in 2012

surged by 41.7%. This output is recorded at cost, and

a substantial component o this cost is employees

compensation. Data or the frst hal o 2012 thereore

reect the impact o the salaries and benefts award o

September 2011.

Removing oil and gas, manuacturing (dominated in

nominal terms by refning and petrochemicals) and

government activity rom the aggregate nominal GDP

numbers leaves frst-hal nominal income growth at a

more sedate 10.3%. This is not much aster than volume

(real) growth o 9.7% or the same group o activities.

In terms o their contributions to aggregate nominal

income, oil and gas continued to account or more than

hal the total (fgure 2.8).

Looking at trends within the frst hal, the leveloaggregate nominal income in the second quarter dipped

below that in the frst. Most o the decline was due to

lower prices or crude oil in the second quarter, with

income expanding in all other sectors.

It is expected that Qatars crude oil export price or 2012

will average around $110 per barrel. Ater the second

quarters dip, prices have again picked up. This should

provide a fllip to nominal output in oil and gas and

in manuacturing. However, the rapid expansion o

government services will, absent a urther signifcant rise

in compensation, peter out in the second hal.

Taking all these actors into account, it is expected that

over the ull year nominal GDP will grow by 14.7% and

that by year-end the overall size o the economy will be

about $199 billion (fgure 2.9).

Prices

Consumer prices

Headline consumer price ination, measured as the year-

on-year percentage change in the consumer price index,

stood at 2.7% in October 2012 (fgure 2.10), or an increase

o 0.4% on September 2012 prices. The narrower core

measurewhich strips out ood, utilities and residential

rent, as they are the most volatile components o the

consumer price basketwas 3.1% higher in October 2012

than 12 months earlier.

Although headline ination has been rising since June

2012, the narrower core measure started to moderate in

August 2012.

Within the overall consumption basket, inationarytrends are mixed. Price ination or some components,

such as urniture, textiles and home appliances, has

Figure 2.8 Share o nominal GDP, hydrocarbons and


0

20

40

60

80

100

Hydrocarbons Non-hydrocarbons

H1 2012H2 2011H1 2011

.

.

.

.

.

.


quarrying.Source: GSDP estimates based on QSA release dated September



Figure 2.9 Nominal GDP ($ billion)

0

50

100

150

200

20122011201020092008

115.1

97.7

198.5

173.0

124.6

Forecast

Sources: QSA release dated September (http://www.qsa.gov.qa/eng/

index.htm) and GSDP estimates.


Figure 2.10 Monthly headline and core ination

(year on year, %)

1.5

0

1

2

3

4

5

6

7

CoreHeadline

Oct 12Jul 12Apr 12Jan 12Oct 11Jul 11Apr 11Jan 11

4.3

3.1

3.8

6.1

4.6

3.6

4.0

2.4

1.2

2.72.6

2.22.2

Note: Core infation is headline infation less ood, rent and utilities.

Source: GSDP estimates based on QSA release dated November and

Qatar Inormation Exchange database (http://www.qix.gov.qa/), accessed

November .



33/424


accelerated while or others, such as transport and

communications, it has moderated (fgure 2.11).

Movements in the rental component o the consumer

price index have had a decisive inuence on the patho headline ination in 2012. In April and May, the rental

price index bottomed out. Since then, month on month,

rents have been rising. While it was only in October that

year-on-year rises were recorded or the frst time since

the last quarter o 2008, slower annualised deation has

likewise been exerting less o a drag on the headline

rate. Renewed rental ination added about hal a

percentage point to the headline ination outcome or

October.

Junes QEO20122013 orecast year-average consumer

price ination in 2012 at 2.0%. Through to October,annual average ination ran at 1.8%. Given the possibility

o a urther mild acceleration (as rents look set to

continue their recent rise), this 2.0% estimate or the year

remains unchanged.

Producer prices

QSA released a producer price index or the frst time

in 2010. Calculated using the average o 2006 prices as

the base, the index reects the prices that domestic

producers receive or their output (net o taxes plus

subsidies).

Producer prices advanced in the frst hal o 2012 by

11.2% (fgure 2.12) on the back o rising crude oil prices

they rose sharply in the frst quarter, but decelerated

in the second. Hydrocarbon price changes, which

have a weight o 77% in the index, explain much o the

second-quarter slowdown, which was also inuenced

by a retreat in producer prices or manuactures (largely

petrochemicals and refned products).

Asset markets: Equity and property

Qatar Exchange (QE) is the domestic trading platorm

or equities. The QE Index, a benchmark index o the 20

largest and most liquid stocks, ended November 2012 at

8,401, or about 19

Date post:	04-Apr-2018
Category:	Documents
Upload:	shabina921
View:	215 times
Download:	0 times

QEOUpdate20122013 English(Final)

Documents