Qatar is one of the ‘best placed’ GCC countries to weather the current fall in oil prices, PwC announced in its new report and has forecasted the country’s real GDP to grow by 6.5 per cent in 2015, and average around 6.2 per cent a year between 2016 and 2019
PwC said that its forecast has been based on factors such as Qatar’s projected population growth, resilient oil and gas sector, non-energy sector growth and stable inflation.
However, to overcome some of its current challenges and create a thriving investment environment, the author of the report, Stephen Anderson, has urged Qatar to further strengthen its macro-fiscal capabilities.
The country’s vast natural gas reserves and emphasis on gas exports, along with the decoupling of gas and oil prices in the aftermath of the Japanese earthquake of 2011, has suggested that it was likely to be one of the best placed GCC nations to tackle the current fall in oil prices.
PwC said that it expected strong growth in Qatar’s working age population with the population projected to grow by an additional 10 per cent a year, reaching 2.5mn in 2018 due to the continuous influx of immigrant workers.
The report added that the substantial growth in the non-oil and gas sector should outpace hydrocarbons, driven by government expenditure, which PwC expected to continue growing strongly following an 18 per cent average annual growth rate between 2008 and 2013.
The country’s growth forecast has also been based on projected ‘stable inflation,’ which it said should run at around four per cent over the next five years, resulting from low oil prices partially balancing upward pressure brought on by the planned investment programme.
However, PwC stressed Qatar was not immune to the fall in oil prices and there are challenges that remain for the country.
Increased gas supply in the medium term may create downward pressure on global gas prices, it added.
Anderson said, “To meet these challenges and create a thriving investment environment we recommend that the authorities continue to strengthen macro-fiscal capabilities in three areas: first, by accelerating the deepening of Qatar’s capital markets and sources of funding; second, expanding the government’s revenue base; and finally, managing government expenditure efficiently.
“These measures will help to achieve the desired AAA credit rating, develop a business environment attractive to private and international investors, diversify the economy, and ensure prudent management of governmental expenditure.”
The impact of global oil prices has already weighed on major downstream petrochemical projects in Qatar. In addition, while the report forecasted project inflation to stay at manageable levels in the medium term, the threat of inflation volatility due to the unprecedented investment programme related to the 2022 FIFA World Cup remained.
