Qatar registers exceptional gains

Notwithstanding the self-imposed moratorium on development of hydrocarbon projects until 2015, Qatar's economy is widely anticipated to continue recording exceptional results in the next few years. The moratorium is an understandable move deemed necessary to grant the country an opportunity to consolidate the exceptional gains made in the recent past.

To be sure, Qatar has made steady headway in the production of oil and gas in a span of 15 years. In 2011, Qatar recorded a new milestone by celebrating achievement of 77 million tonnes per year of liquefied natural gas (LNG). Comparatively, production capacity amounted to 54 million tonnes in 2010. Still, the original plan called for enhancing production capacity to 120 million tonnes per year in 2012.

In fact, Qatar is second to none when it comes to exports of LNG, having overtaken Indonesia several years ago. For good reasons, exporting destinations are diversified enough, led by the UK, India, South Korea and Japan.

Undoubtedly, Qatar's gas sector is boosted by hard facts. According to the BP Statistical Review of World Energy, the country's gas reserves amount to 25.3 trillion cubic metres, comprising 13.5 per cent of proven global reserves. At 23.9 per cent and 15.8 per cent of global reserves, respectively, only Russia and Iran have more gas reserves than Qatar.

Higher GDP

Aside from the gas sector, Qatar has succeeded in expanding its oil production potential. Again thanks to efforts by international firms, the country's oil production capacity exceeds its Opec quota of around 810,000 barrels per day.

All told, Qatar's economic achievement in 2011 was exceptional, partly reflecting developments in the petroleum sector, namely steady prices of oil and gas as well as steady rise of spending in the local economy. Not surprisingly, the IMF estimated real (adjusted for inflation) gross domestic product (GDP) at 19 per cent in 2011, up from 17 per cent in 2010.

In addition, the government has increased spending in the fiscal year 2011-12 by 25 per cent to a record $38.5 billion (Dh141.39 billion). As with other Gulf Cooperation Council countries, the fiscal year in Qatar starts in April.

Private investment

For their part, private sector investors, who traditionally take the lead from the public sector, opted to follow suit by committing funds for numerous projects especially in the hospitality sector.

Yet, surprisingly in its 2012 Article IV consultation survey, the IMF projected drop of real GDP growth rate to 6 per cent for this year.

The matter chiefly reflects the moratorium decision undertaken by the authorities with regard to new projects in the petroleum sector, namely gas and oil. The other reason behind slower real GDP growth rate relates to the doubling of inflation rate to 4 per cent in 2012 as a consequence of stronger spending.

Nevertheless, stronger income, and hence spending, cannot be ruled out in the fiscal year ending in March, as the authorities prepared the budget assuming a conservative oil price of $55 per barrel, almost half the rate in international markets.

Notable growth

Much to the credit of the gas sector, crude oil is the second source of income for the treasury.

One thing is for sure: Qatar's economy is bound to register notable growth rates in the foreseeable future on spending a sizeable amount of money while preparing the county to host the World Cup 2022. Spending is estimated to range from $70 billion to over $100 billion.

Lastly, the country's macroeconomic conditions are equally fine with budget surplus amounting to 2.7 per cent of GDP in fiscal year 2010-11 and current account standing at 28 per cent of GDP in 2011.

The writer is a Member of Parliament in Bahrain.