As a testament to Qatari government’s successful attempt at diversifying the economy, the non-hydrocarbons sector is expected to lead Qatar’s economy in the coming years.
The Meed’s Middle East Economic Review 2013 forecasts that Qatar’s oil sector will grow by only around in 0.4 percent this year. However, the sector is likely to shrink by 1.1 percent in 2014 as the country’s LNG expansion program has been halted. In contrast, the tiny Gulf state will be propelled by other non-traditional sectors of the economy. Estimates by the International Monetary Fund show that the country’s non-oil GDP growth would be 9 percent and 9.5 percent in 2013 and 2014, respectively.
The Meed report points out that the construction sector will provide the base for much of Qatar’s non-oil growth. With the preparations for FIFA World Cup 2022 picking up, Qatar is investing several billions of dollars in building world-class infrastructure projects. The country has projects worth around USD 183 billion in its pipeline. Some major projects include the Doha Metro Scheme, development of new Hamad International Airport and several other football stadiums.
According to the report, “executing all the planned schemes will require huge amounts of materials and manpower. The concern is that this could lead to rapid cost inflation and an overheating economy as 2022 draws nearer. Consumer price inflation in Qatar has been less than 2% for the past two years, but economists are forecasting an increase to 3% this year and 4% in 2014”.
The banking and finance sector in Qatar is also expected to demonstrate strong performance and churn huge profits. With non-performing loans making up only 2 percent of the total loans, lowest in MENA region, the Qatari banking sector does not face any significant risks that may mar its performance in the coming years. Recently, the country’s stock exchange was also upgraded from frontier to emerging market in the MSCI index.