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Qatar Business Forecast Report Q3 2014

  • June 2014
  • -
  • Business Monitor International
  • -
  • 47 pages

Core Views

Qatar’s short-term political risk profile remains among the most stable in the region. Despite enjoying little in the way of democratic freedom, Qataris benefit from massive hydrocarbon wealth which is spread generously across the country’s native population and enjoy the highest per capita GDP in the world. A small population – and one without much inclination to protest against the government – will keep the country insulated from large-scale public unrest in the immediate term.

Sheikh Tamim bin Hamad Al Thani became the new ruler of Qatar in June 2013, in a peaceful handover from his father, Sheikh Hamad bin Khalifa. The 34-year old Emir’s first public address and the composition of his new cabinet suggest that policy continuity will be the order of the day. Strong growth in the non-hydrocarbon economy, stemming from extensive construction activity and the rapid expansion of the services sector, will drive economic activity over 2014 and 2015. We forecast real GDP of 5.7% this year and 6.1% in 2015, from 6.5% in 2013.

Table Of Contents

Qatar Business Forecast Report Q3 2014
Executive Summary. 5
Core Views..5
Key Risks To Outlook5
Chapter 1: Political Outlook. 7
SWOT Analysis.. 7
BMI Political Risk Ratings 7
Domestic Politics . 8
Slow 'Kafala' Reform To Harm Diversification Ambitions...8
Qatar's proposals for labour reform - including an overhaul of the controversial 'kafala' system - will not be implemented quickly. The
slow pace of reform will continue to damage the country's international image, in turn harming the government's ambitions to turn Qatar
into a knowledge-based economy.
Foreign Policy ... 9
Support To Sudan Highlights Independent Foreign Policy.9
Qatar's increasing ties with Sudan - including the provision of USD1bn in direct financing -support our view that a shift in the
independent and assertive character of Qatar's foreign policy is unlikely. The Qatari aid also provide s a timely source of financing to
Sudan's government, and add s to its role as a key economic partner for the country.
Long-Term Political Outlook.. 10
Limited Challenges For The Coming Decade10
We find it hard to argue that political instability could become a core scenario in Qatar. Nevertheless, with the government playing
the role of conflict mediator in one of the hottest international conflict flashpoints in the world, in addition to having a growing young
population and increasing number of expatriates, Qatar will not be immune to external and internal shocks in the long run.
Chapter 2: Economic Outlook 13
SWOT Analysis 13
BMI Economic Risk Ratings... 13
Economic Activity... 14
Growth Forecasts Revised Upwards..14
We have raised our economic growth forecasts for Qatar and now project average annual real GDP growth of 5.7% between 2014 and
the end of the decade, from 5.1% previously. Strong population growth and progress on the government's large-scale infrastructure
programme will drive both construction activity and the sustained expansion of the services sector.
table: Economic Activity..14
Investment Climate 17
What If Qatar Loses The World Cup?.17
Uncertainty over Qatar's hosting of the FIFA 2022 World Cup is increasing. Although our baseline scenario assumes that the event will
go ahead in Qatar as planned, we analyse the impact that a cancellation would have on the country's economy.
Fiscal Policy 20
New Budget Continues Focus On Infrastructure..20
Qatar's budget for the 2014/15 fiscal year signals a continuation of the government's expansionary fiscal stance, and supports our highly
positive outlook towards Qatar's fixed investment prospects and the construction sector.
Monetary Policy .. 22
Population Growth And Diesel Hike To Fuel H214 Inflation..22
We forecast annual consumer price inflation of 3.6% in 2014, increasing to 4.5% in 2015. We expect rising rental rates to remain the
main driver of inflation over the medium term, with the government's decision to raise domestic retail prices for diesel by 50% from May
2014 onward adding a more temporary source of pressure.
table: Monetary Policy22
Chapter 3: 10-Year Forecast... 25
The Qatari Economy To 2023. 25
Solid Long-Term Growth Prospects...25
The outlook for the Qatari economy over the next 10 years is positive, particularly given the positive outlook on the hydrocarbon sector
and our view that the country will continue recording substantial current account surpluses. Political risk is likely to remain low, as we do
not see the al-Thani family losing its grip on power.
table: Long-Term Macroeconomic Forecasts ...25
Chapter 4: Business Environment. 27
SWOT Analysis 27
BMI Business Environment Risk Ratings.. 27
Business Environment Outlook. 28
Institutions... 28
Infrastructure... 30
Market Orientation .. 31
Operational Risk.. 33
TABLE: Top Export Destinations ...33
Chapter 5: Key Sectors.. 35
Freight Transport. 35
table: Air Freight ...36
table: Maritime Freight 37
Water 38
table: Key Data, Water Industry, Water Extraction38
table: Water Consumption..39
table: Water Treatment and Wastewater40
Other Key Sectors... 43
table: Oil and Gas Sector Key Indicators.43
table: Pharma Sector Key Indicators43
table: Infrastructure Sector Key Indicators...43
table: Telecoms Sector Key Indicators44
table: Food and Drink Sector Key Indicators.44
table: Autos Sector Key Indicators...44
Chapter 6: BMI Global Assumptions. 45
Global Outlook. 45
Emerging Market Deceleration45
Table: Global Assumptions.45
Table: Developed States, Real GDP GrowtH, %...46
Table: Emerging Markets, Real GDP Growth, %..47

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