Oil recovery credited with bump in Qatar GDP
Published on 16 Jan, 2017
Recently released figures show some gains in Qatar’s projected GDP during the third quarter of 2016 -- an estimated 3.7 percent year-over-year growth.
Officials estimate that, factoring in constant prices, the country's gross domestic product rose 3.6 percent from second-quarter figures.
Splitting the economy into a “hydrocarbon” segment and “non-hydrocarbon” growth, Qatar’s Ministry of Development Planning and Statistics showed growth or expansion of 2.7 percent in hydrocarbons, or the traditional oil sector, and 4.7 percent outside the oil market. That translates to 3.2 percent growth in the hydrocarbon segment GDP and 4.1 percent growth in non-hydrocarbons.
In terms of how Qatar is diversifying its economy, officials pointed to sectors like construction, retail, financial and insurance, and manufacturing.
For more input on these financial numbers, the Gulf News Journal spoke with Meenal Bhanushali, a senior research analyst at the global research firm Aranca. She has researched equity markets in the Middle East for leading buy- and sell-side research firms, including researching several sectors and tracking macroeconomic developments.
“We believe the early signs of uptick in the country’s GDP growth is supported by oil prices recovering and the non-hydrocarbon segment continuing growth,” Bhanushali said.
Better oil outlooks will continue to help, she said.
“A more stable oil and gas pricing environment will help Qatar’s economy to witness an upturn in growth going forward, and help the Qatar government soften the impact of its first budget deficit in 15 years,” Bhanushali said, citing World Bank statistics.
Looking at Qatar’s journey, Bhanushali described a process by which GCC nations are finally untethering from oil, at least to some extent.
“Historically, over 50 percent of government revenue has been sourced from the hydrocarbon sector,” she said.
She said that following the recent big changes in oil prices, which shook global markets, Qatar adopted a diversification strategy that focuses on non-hydrocarbons. It now appears to be relying partly on spending to boost sectors that will need to contribute to the country’s economic engines in the future.
“The government has rationalized its spending,” Bhanushali said, citing projects like the 2022 FIFA World Cup and ongoing investment in both the health care and education sectors. “We expect the spending to aid non-hydrocarbon segment expansion and reduce dependency on hydrocarbons in the long run.”
Other analysts see potentially diverse economic outlooks and outcomes for Qatar. Forbes writer Dominic Dudley suggested that the nation could see a “credit crunch,” while also pointing out other challenges, such as Qatar’s labor record. However, citing the FIFA project and others, Dudley suggested that parts of the Qatar oil economy are built on a firm foundation.
“In its favor, it’s worth noting that the Qatar economy has proven more resilient than those of most of its neighbors,” Dudley wrote. “The country has the advantage of having the world’s largest natural gas field, the North Field … and the fact that international gas sales are typically arranged through long-term contracts. That means the country isn’t as susceptible to the volatility in oil prices that Saudi Arabia, the UAE, and others have to deal with.”