DOHA: Qatar said on Wednesday it has halved its forecasts for economic growth in 2015, the latest sign of the hit taken by the wealthy Gulf state's economy at a time of low oil prices.
Growth expectations were slashed to 3.7 percent from the 7.3 percent forecast in June. But the government's biannual outlook said the hydrocarbon-rich nation would record a fiscal surplus this year of 1.7 percent of GDP, a figure above the 1.4 percent it projected in June.
"On the fiscal side, the government is taking measures to rationalise expenditure. Still, markedly lower hydrocarbon revenue will narrow the surplus in 2015 and is expected to lead to a modest deficit in 2016 of around 4.8 percent of GDP," Development Planning and Statistics Minister Saleh al-Nabiy said in the report by his ministry.
It said a continued mismatch in oil market supply and demand could prompt a larger adjustment in government spending plans but an anticipated pick-up in oil prices and continued spending restraint could see Qatar's deficit begin to retreat in 2017.
Qatar's upcoming budget is being scrutinised for the impact lower hydrocarbon prices will have on state spending as the country pursues preparations for the 2022 soccer World Cup.
It will also be Qatar's first new budget in almost two years, after it shifted its fiscal year to Dec. 31 from Mar. 31 earlier this year.
Oil prices remain a serious risk to the outlook for Qatar's economy. The ministry based its forecasts on oil priced per barrel at $52.40 in 2015, $51.20 in 2016 and $55.30 in 2017, according to the report. This is down, respectively, from $56, $61.60 and $65.60 used in the June report.
"The explanation for the slower (2015) GDP growth lies entirely in the performance of the oil and gas sector," the ministry report said, adding that crude oil output in 2015 is expected to be about 6 percent below 2014 levels.
Real GDP growth is expected to increase to 4.3 percent in 2016 before tapering to 3.9 percent in 2017, as benefits from increased gas and condensate production are offset by a slowdown in construction and the inflow of migrant workers as infrastructure spending peaks.
The chances of divergent monetary policies further complicate the outlook, the ministry said, noting the impending rise in interest rates in the United States for the first time in almost a decade.
Qatar pegs its currency to the U.S. dollar, which should mean it mirrors American rate decisions. However, Qatar's central bank governor said in October that he saw no reason to imitate any U.S. rate hike due to positive liquidity conditions in the Qatari banking system.
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