Qatari Economy Heads for Double-Digit Growth

Soaring gas exports will ally with rebounding oil prices and production to catapult Qatar's economy into double-digit growth in the next two years while its fiscal surplus will sharply widen, a key Saudi bank said.

The gross domestic product of the world's third gas power is estimated to have swelled by 9.4% in 2009 despite the adverse impact of the global financial turmoil after leaping by nearly 14.3% in 2008.

"The outlook for the next couple of years is bright. Three new 7.8 million tonnes a year LNG trains are expected to come on stream, while those which started operations during late 2009 should be producing at close to full capacity. Overall LNG output is expected to rise from about 40 million tonnes in 2009 to more than 75 million tonnes by 2012, with much of the increase occurring in 2010," the Saudi American Bank Group (Samba) said in a study.

It said most of the LNG production is already contracted for export to foreign markets, and the rest will be sold on the open market.

Accompanying this expanded LNG capacity will be additional NGL (natural gas liquids) production, estimated at around 150,000 bpd, which will also be mainly exported, and an expected pick up in oil output as OPEC gradually eases quotas, it said.

"While world gas prices may remain muted due to a relative abundance of supply, oil prices are projected to increase to an average of US$75 a barrel in 2010 and US$85 in 2011, and this will provide a further boost to earnings," Samba said. "All together, the expected surge in hydrocarbons production and associated revenues will help propel real GDP growth in Qatar to 18% in 2010 and 13% in 2011, with nominal GDP rising to US$135 billion, equivalent to a projected US$84,000 per capita."

The study said the surge in Qatar's LNG output to more than 40 million tonnes in 2008 from 30 million tonnes in 2008 allowed the country to avert the effects of the global crisis despite a sharp decline in its nominal GDP in the second half of 2009 because of lower crude prices.

"Bolstered by rising LNG and associated NGL output, the Qatari economy has been able to ride out the global economic storm during 2009 and post real GDP growth of an estimated 9.4%," it said.

"This has been driven by the combination of rising hydrocarbons output and increased public spending which has helped sustain a strongly positive momentum in the non-oil sector. However, strains remain in the real estate sector, which has suffered from a sharp decline in prices and, despite robust government support, banking activity has slowed considerably with annual credit growth dropping from more than 50% to 10 % in 2009." - Business 24/7