Qatar is currently the Fastest Growing Economy in the World

Posted on : Sat, 20 Aug 2011

According to QNB Capital, Qatar is currently the fastest growing economy in the world with a compounded average real GDP growth of 15.7% during 2006-10 (Fig 1). Large investments made by the state in the natural gas and other sectors have ensured rapid growth and diversification of the economy. The benefits of this have also stimulated activities in the private sector, which along with increased government spending have ensured strong growth also in the non-oil and gas sector. The non-oil and gas sector witnessed a compounded average growth of 16.4% during 2006-10.

QNB Capital forecasts that Qatar will continue to be the fastest growing global economy in 2011 with an estimated real GDP growth of 21.0% (Fig 2). The forecasts are based on further expansion in natural gas and related sectors as well as the non-oil and gas sectors.

The oil and gas sector will be one of the main driving forces for GDP in 2011 with an expected growth of 29.5%. The key individual driver within this sector will be natural gas, which is expected to witness a substantial growth in 2011 with LNG production capacity already reaching 77 million tons, from 62 million tons in 2010.  Condensate production (including GTL) is estimated to reach 685,000 barrels per day (bpd) in 2011, from 396,500 bpd in 2010. Pipeline gas is estimated to reach 4 billion cubic feet per day in 2011 through the Dolphin and Al Khalij projects.

Also supporting growth for the economy is the crude oil sector with an average estimated production of 800,000 bpd in 2011 from 780,000 bpd in 2010. Although oil production capacity has reached over 1 million barrels per day (bpd) in 2011, output is restricted due to output targets set out by OPEC.   

The non-oil and gas sector is expected to grow by 14.1% in 2011, driven mainly by manufacturing, financial services and a rebound in the construction sector. The manufacturing sector will get a major boost with extensive expansion in petrochemicals mainly through Q-Chem II, Qatofin, Ras Laffan ethylene cracker, and additional capacity at QAPCO. Sound monetary policy will help both the financial services sector and the construction sector, as lower interest rates will support credit growth. 

Further, the government’s commitment to spending and economic stimulus will form a back-bone of confidence for the private sector. The 2011/12 State budget alone has allocated around US$16bn for projects in infrastructure, education, youth welfare, and healthcare. Projects with an estimated value of US$185bn are expected to be carried out in the coming ten years. This along with strategic external investments by the State will provide additional diversification opportunities and sustain economic growth for many years to come.