* GDP growth seen at 15 pct in 2011 - development planning
* Projections more pessimistic than analyst forecasts
* World Cup spending unlikely to ramp up until after 2012
By Regan Doherty
DOHA, Oct 25 Qatar's economic growth is expected
to slow down sharply to 5.1 percent in 2012, from a projected 15
percent for this year as the country's decades-long gas
expansion programme winds down, the Gulf state's development
planning authority GSDP said on Tuesday.
"The GSDP foresees a sea change in the economy's dynamics in
2012," the General Secretariat for Development Planning (GSDP)
said in a report.
"The impulse to growth from vigorous expansion of the
hydrocarbon sector in past years will rapidly recede and growth
will increasingly depend on solid performance in other sectors,"
The projection is more pessimistic than September's Reuters
poll of analysts, which forecast the economy of the world's top
liquefied natural gas exporter to expand by 18.9 percent this
year and 7.7 percent in 2012 helped by higher gas output and
robust government spending.
"This is entirely a hydrocarbon effect," Frank Harrigan,
director of the department of economic development, told a news
In 2010, the hydrocarbon-reliant economy is estimated to
have grown by 16.6 percent in real terms by the International
Monetary Fund. Qatar has yet to release 2010 GDP data in
New investments in Qatar's hydrocarbon sector must await the
results of a technical study on the country's North Field, the
source of its massive gas reserves.
In 2005, the country declared a moratorium on development of
the North Field, expected to last through 2014 and possibly
Qatar, one of the top investors globally through its
sovereign wealth fund, would not be immune to the impact of a
potential recession in advanced economies as global credit
market difficulties could seize up capital funding for the
country's many planned projects, the authority said.
"The possibility of a sharp fall in activity in advanced
economies -- made worse by sovereign debt problems in Europe
spilling over into those economies' banking sector and going
global -- would affect Qatar," the report said.
"Falling oil prices and constraints on project financing
would be two ways in which such turbulence could reverberate
through the domestic economy."
However, the Gulf Arab country is well-positioned to ride
out any turbulence as banks are well-capitalised and the
government holds ample fiscal reserves, it said.
Qatar's government budget surplus should reach 12.6 percent
of economic output in calendar 2011 and 7.8 percent in 2012, the
The surplus for fiscal 2010/11 was revised to 19 billion
riyals ($5.2 billion), or 4.1 percent of gross domestic product,
it said, up from a previously reported 13.5 billion riyals, or
2.9 percent of GDP. Qatar's fiscal year starts in April.
Aggregate growth of 5.1 percent in 2012 would require
Qatar's non-oil economy to grow at approximately 9 percent, on a
par with China's growth and faster than that of India, the
Spending linked to the 2022 World Cup is unlikely to ramp up
until after 2012, the report said, estimating base outlays on
stadia and facilities at $9 billion.
The country has allocated 40 percent of its budget between
now and 2016 to infrastructure projects.
Qatar's central bank said in a separate report on Tuesday
that banks are well provisioned to withstand unforeseen
contingencies, and a sharp rise in commodity prices and rising
local non-rent inflation pressures are likely to be a major
concern going forward.
"Qatar's financial system has remained largely insulated
from the global economic gyrations. The banking system continues
to remain sound, profitable and resilient," Central Bank
Governor Sheikh Abdullah bin Saud al-Thani wrote in the
financial stability review.
Proactive liquidity management and ensuring orderly
financial market conditions remain a top priority for the
central bank, it also said in the review posted on its website
Consumer inflation in Qatar edged up to 2.2 percent on an
annual basis in September, its highest level since at least the
beginning of 2010, but still far from a record 15 percent seen
in the oil-boom year of 2008.