The Qatar Financial Centre Authority (QFCA) CEO has said he is “looking at 70% contribution” from the country's non-hydrocarbon sector to the national gross domestic product (GDP) for 2016 and 2017.
QFCA chief executive Yousuf Mohamed al-Jaidah, who was speaking at Doha Bank’s recently-held forum, “Growing Opportunities in Qatar,” expressed optimism that in the next three years Qatar’s annual real GDP growth will be around 4% to 5%.
“Quantifying the macro-economic situation, the reality is quite different. Qatar has definitely built a solid economy in the past 10 years. The reality is that there is real GDP growth. No matter what sources you look at, real GDP growth in Qatar in the next three years will be around 4% to 5%,” al-Jaidah stressed.
According to al-Jaidah, the “biggest components” that contributed to GDP growth in 2014 are from Qatar’s non-energy industries: “The fastest growing components of the non-oil and gas sector were construction, which contributed 18%, training and hospitality (14%), finance (12%), transport and telecommunication (10.4%), and government services (8%).”
He added: “There are other economic contributors than Qatar’s hydrocarbon industry. There is massive contribution from the non-hydrocarbon sector and I think that will continue to grow in the coming years, and I think the government will place tools and laws for diversification that would increase efforts to diversify this economy further.”
Citing various indicators, al-Jaidah said Qatar “has taken several steps to build a strong surplus,” encourage economic diversification by amending recent laws, and promoting the private sector to further strengthen the country’s economy.
“All of these indicators show that Qatar’s economy can and will continue to thrive even if oil prices were stabilised at $30 to $40 per barrel. I think the reality of the situation is that the economy can definitely sustain itself,” he said.
In the short-term, al-Jaidah said, the impact of lower oil prices “will definitely have an immediate effect on Qatar’s nominal GDP.”
“It will also have an effect on the fiscal and external balances, and for given production volumes, lower oil prices will drive down value added in the hydrocarbon sector. It will depress fiscal revenues and narrow the surplus, and will curtail Qatar’s export revenues,” he said.
But al-Jaidah also noted that despite the growth in government expenditure, “which will definitely result in a deficit,” it shows that the government “is still willing to spend” on infrastructure and other projects.
Citing Qatar’s 250bn barrels worth of oil reserves, al-Jaidah said “Qatar can withstand low oil prices even for another decade.”
“Current account balances will still be positive; there will be a surplus in the current account balances. I think for 2016-2017, Qatar will have a 5% surplus,” al-Jaidah said.
He added: “In the last 10 years, it was all about building a hydrocarbon economy, which has already come to fruition. I think Qatar’s economy is ready to open up, diversify, and include more amendments to certain laws, which will allow more foreign direct investments into the country.”