GIH report on Qatar economy

The Global Investment House on Qatar highlights a big leap in GDP since the launch of the world's largest gas liquefaction venture a few years ago. The economy has recorded remarkable growth in the last few years, though the growth rate has slowed down in the last couple of years.

Between 1998 and 2002, Qatar's nominal GDP is estimated to have grown at a CAGR of 14.2%. Real GDP growth, which reached a peak of 11.6% in the year 2000, has subsequently declined to 4.6% (provisional) in 2002.

But with the current general worldwide growth in the demand for gas, further rapid growth is possible in the longer term. Planning council's preliminary estimates indicate that the nominal GDP grew by nearly 2% in 2002, to reach QR63.5bn compared to a decline of 3.6% in 2001.

Revival in the oil prices towards the second half of the year 2002, has led to the oil and gas sector record an estimated increase of 2.4% to reach QR37.5bn, while the non-oil sector is estimated to have increased by only 1.4%.

Analysis of the GDP data reveals that the oil and gas sector contributed nearly 59% of the GDP in 2002, almost the same as in 2001. Apart from the oil and gas sector, the major contribution to the GDP was made by the other services segment which consists of the government services, social services, household services, imputed bank service charges and import tariffs, etc.

This sector contributed 32% to the non-oil and gas GDP, while its contribution to the total GDP was 13.1%. The other major contributors to the GDP have been the Finance, Insurance and Real Estate and the Trade, Restaurant and Hotels sectors which contributed nearly 7.5% and 6% respectively.

An analysis of the GDP by expenditures reveals that the domestic demand increased by nearly 5% in 2001 after having increased by 20.5% in 2000. Most of this increase was backed by increase in the capital expenditure (gross fixed capital formation), which would drive the economy of Qatar in the future. The investment spending increased by nearly 52% and 12% for the years 2000 and 2001 respectively.

During the years 2000 and 2001 the private sector recorded steady growth of above 3%. Even though the breakdown of the GDP by expenditure is not available for the year 2002, we believe the investment spending has maintained its growth rate and the private consumption has also seen some increases.

The current strong crude prices and higher oil production (above the OPEC quota) should further boost the economic growth of Qatar. But any decline in the oil prices or OPEC production quotas in the coming years should lead to a slowdown in the growth rate of the economy.