As outlined by QNB Capital’s upcoming “Qatar Economic Insight – September 2011” report, Qatar’s nominal GDP expanded by 30% in 2010 to reach QR463bn (US$127bn). This makes Qatar the fourth largest economy in the GCC, accounting for 12% of the region’s GDP. This has been achieved despite Qatar having a relatively small population. With GDP per capita reaching US$75,000 in 2010 at market exchange rates, Qatar is the wealthiest country in the GCC. QNB Capital forecasts that Qatar’s nominal GDP per capita will rise to around US$109,000 by 2012 on the back of strong oil prices and increased output.
In terms of GDP per capita at purchasing power parity (a measure of GDP that equalises the purchasing power of local currencies rather than using market exchange rates), Qatar overtook Luxembourg in 2010 to become the country with the highest GDP per capita worldwide at US$88,559 (Fig 1). At market exchange rates, Qatar had the third highest GDP per capita at market exchange rates in the world behind Norway and Luxembourg in 2010.
Rising gas-related exports and high energy prices have been the main drivers of nominal GDP growth, according to the Qatar Economic Insight report. The development of Qatar’s North Gas Field, liquefied natural gas (LNG) projects and other gas-related products, such as gas to liquids, condensates and natural gas liquids (liquid hydrocarbons that are usually extracted from raw gas), have boosted the importance of the gas sector. Gas-related exports have risen from 38% of total exports in 2006 to a remarkable 60% in 2010.
Overall, the oil and gas sector accounted for 52% of GDP in 2010. LNG is largely sold through long-term supply contracts with some contracts having prices linked to crude oil. Oil prices are therefore a key driver of Qatar’s nominal GDP. Qatari crude oil prices rose by 25% from an average of US$62/barrel (/b) in 2009 to an average of US$78/b in 2010. This, combined with further LNG expansion, was instrumental in the 30% increase in nominal GDP in 2010, according to QNB Capital.
Qatar’s strong economic growth continued in the first quarter of 2011. Nominal GDP rose by 12% from QR126bn (US$35bn) in the fourth quarter of 2010 to QR142bn (US$39bn) in the first quarter of 2011. In the first eight months of 2011, Qatari crude oil prices (the average of dukhan and marine crude) have averaged US$108/b. QNB Capital expects oil prices to be slightly lower in the remainder of the year as global economic weakness negatively impacts demand. Therefore, Qatari crude is forecast to average US$105/b over 2011, falling to US$100/b in 2012.
Based on these strong oil prices and a substantial increase in natural gas production, nominal GDP is expected to grow by 36% in 2011 to reach US$173bn. In 2012, a further increase in oil and gas production and growth in the non-oil and gas economy will more than offset softer oil prices, boosting GDP a further 14% to reach US$197bn. QNB Capital forecasts that the oil and gas sector will grow by 53% in 2011 to US$101bn and by 14% to US$115bn in 2012.
The non-oil and gas sector will, in turn, be boosted by high revenues flowing into the economy from the oil and gas sector and by committed development spending by the government. This will lead to a significant 17% growth in the non-oil and gas sector in 2011 and by 14% in 2012. The financial services, insurance and real estate sector is expected to expand by 15% in 2011 to US$20bn and by 22% in 2012 to US$24bn due to public and private investment in major projects. Manufacturing is expected to grow by 26% to US$17bn in 2011 and by 11% to US$19bn in 2012 due to higher prices and additional output from new petrochemicals, metals and fertiliser facilities.
All these factors will contribute to pushing nominal GDP per capita at market exchange rates in Qatar over the US$100,000 mark by 2012.