Qatar Economy to Continue Strong Growth in 2013, QNB Says

Doha , July 13 (QNA) - Qatar continues to enjoy a strong economy and will maintain the same momentum of 2012, Qatar National Bank (QNB) said Saturday in its weekly report. The report said that Qatar's budget surplus will help it make more investments in infra-structure, something that will aid the diversification of the Qatari economy. The group also said that Qatars real GDP expanded at a rapid pace in the first quarter of 2013 by 6.2% year-on-year, according to the Qatar Statistics Authority. The current account surplus peaked on robust export performance, coupled with moderate inflation rates. They expect real GDP growth to accelerate during the remainder of 2013 to reach 6.5% for the entire year. The group expects GDP to then rise by 6.8% for 2014 supported by large infrastructure investments and associated population growth which will more than offset the strong headwinds from the global economy. The report said that growth figures for the first quarter of 2013 confirmed the success of the ongoing process of diversifying the Qatari economy away from its traditional role as a hydrocarbon exporter towards a manufacturing and services hub. Manufacturing was the fastest growing sector by 12.5%. It was aided by production from the new Pearl gas-to-liquids (GTL) facilities. Construction was also witnessing rapid growth, 11.7% year on year and 6.3% in the first quarter alone compared to the final quarter of 2012. The figures reflected that Qatar's infrastructure development program was gathering steam. Oil and gas sector, still the largest component of real GDP at 42%, was the lowest contributor to growth. It expanded by an annual rate of 0.8% as maintenance downtime at LNG facilities and fluctuations in oil production in late 2012 affected the first quarter results. Population growth continued to drive the performance of other sectors as trade, restaurants and hotels grew 10.5% in the financial year that end on March 31. Government and Social Services, together with Electricity, Gas & Water, all grew in line with the additional demand from the growing population. The financial services benefited from the booming economy as they grew at an annual rate of 10.5% and 5.8% compared to the previous quarter. Furthermore, the report said that figures for the first quarter of 2013 were in line with QNB Groups full-year forecasts of 6.5% growth in 2013 and 6.8% in 2014. QNB's forecasts were outlined in the 2013 Qatar Economic Insight report. The acceleration in economic activity is expected to be driven by large infrastructure projects that are being implemented in Qatar including the US$35 billion metro and railway project. The QNB report further said that the population growth was Another leading indicator of higher activity. The population grew by 11.3% in the last 12 months. The report added that as a result, the key driver of growth will continue to be the non-hydrocarbon sector at least until 2015, when the Barzan gas project is expected to start production. Additionally, the group said that the economy did not look like it was running into supply bottlenecks or asset bubbles. Rents, which are nearly a third of the consumer price index, have recovered from their trough in June 2012. moreover, the rate of rental increases has been slowing in recent months while non-rent inflation has fallen. Inflation rate meanwhile was at a moderate rate of 3.5%. The group expects it to rise slightly to 3.8% in 2014. The balance of payments data, which were released recently, provided a further indication that the economy was on the rise. The current account surplus rose to 38% of GDP in the first quarter of 2013, boosted by strong export growth, 11%. However, the group expected the surplus to decline slightly in 2013 to 35% due lower oil prices and a pickup in workers remittances. The financial account deficit narrowed as outflows of investment slowed sharply from $16 billion in the fourth quarter of 2012 to $9 billion in the first quarter of 2013. The group said expected financial account deficit to decrease even more as investment outflows continue. (END)