DOHA: Qatar’s economy is forecast to see a rise in growth next year after weathering the impact of low oil prices, according to banking major QNB.
QNB Group’s latest Qatar Economic Insight said strong growth would continue to be based on non-hydrocarbon investment spending. The report predicted real GDP growth to accelerate from 3.2 percent in 2016 to 3.8 percent in 2017 and 4.1 percent in 2018 with the ramp-up in investment spending and initial gas production from the Barzan gas project.
The report also said oil prices are expected to recover over the medium term, averaging $44.7/barrel in 2016, before rising gradually to $55 in 2017 and $57.9 in 2018 as declining US oil production and steady demand growth are expected to reduce excess supply.
QNB Group said inflation is expected to rise to 3.2 percent in 2016 and 3.4 percent in each of 2017 and 2018 in line with the pick-up in global inflation.
It added that lower hydrocarbon revenue and continued capital spending by the government are expected to result in modest budget deficits in 2016 and 2017, but the rebound in oil prices should gradually bring the government back to near balance by 2018.
Revenue is expected to decline in 2016 due to the weakness in oil prices and slower non-hydrocarbon growth, but should pick up over the medium-term due to the introduction of a 5 percent value-added tax in 2018, according to the report.
It said the government is expected to continue its investment spending programme while rationalising current spending, leading to a modest decline in expenditure as share of GDP from 2016 to 2018.
According to QNB, international reserves are expected to be maintained at just below $40 billion, or around seven months of prospective import cover.