World Economy

Qatar Will Top (P)GCC Peers

Qatar says by 2019, its deficit is expected to shrink to 4.2%.Qatar says by 2019, its deficit is expected to shrink to 4.2%.

All six (Persian) Gulf Cooperative Council states (Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman) will experience sharp economic slowdowns in the coming months and throughout 2017, but Qatar is expected to weather the storm better than most, a new report has found.

According to an economic outlook report from BMI Research, next year will mark a “notable divergence in growth” between Qatar, the UAE and the rest of the (P)GCC Arab states, DNA reported.

Qatar’s economy should improve steadily from 3.1% GDP growth this year through 3.6% in 2017 to reach 4.1% by 2020.

That is a way ahead of the predictions for the other (P)GCC states, with the UAE expected to sit around 2.8% growth next year and Saudi Arabia at just 1%, the BMI figures show.

Lower global oil prices has spurred the Arab governments to lower subsidies on fuel and utilities, also taxing consumer purchasing power.

Though BMI projects oil prices will rise from an average of $43.50/barrel this year to $54/barrel in 2017, it said demand will remain lackluster going forward.

 Budget Deficits

While Qatar is predicting a budget deficit for the next three years, it is likely to remain some way below the average forecast deficit of 11% of GDP for the region.

In a report in June this year, Qatar’s Ministry of Development, Planning and Statistics revised its predictions to estimate a deficit of 7.8% of GDP for this year, rising to 7.9% next year.

This is some way larger than the 4.8% the ministry said at the end of last year that it was expecting.

However, by 2019, this deficit is expected to shrink to 4.2%.

In comparison, Saudi Arabia is looking at a deficit of 11.2% of GDP for this year, and 6.8% in 2017 before falling to 2.4% in 2018, international credit rating agency Fitch said earlier this year.

On the plus side, economic conditions are prompting governments to enact structural and fiscal reform.

According to BMI, officials across the (P)GCC will turn to private investment in infrastructure projects as a “way to lessen the pain of government cuts.”

The report added: “We expect to see the public-private partnership model gain traction in several sectors, including transport and power, after decades in which governments have had a clear preference for funding projects directly.”

Earlier this year, the Ministry of Economy and Commerce said new rules would be introduced to ease the way for setting up PPPs, to relieve the state of some of its burden.


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