Qatar Business Forecast Report Q3 2009

Publication Date	July 2009
Publisher	Business Monitor
Product Type	Report
Pages	57
ISBN Number	1748-2380
Product Code	BMI02153

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Summary

Against the backdrop of a severe global recession - we see global growth coming in at -2.6% in 2009, before returning to weak expansion of 1.7% the following year - Qatar will be an outperformer.

The emirate will easily record the highest growth rates in the GCC over the coming years, driven in the main by a massive increase in natural gas production levels. Inflation has collapsed, and the correcting domestic property market has threatened the stability of the banking sector. However, the government will continue to support the sector, as evinced by its latest intervention to buy up banks' potentially toxic real estate investments.

The Qatari polity is likely to remain very stable over the forecast period, with no credible domestic political challengers to the al-Thani family's rule. Any political change will likely tend toward greater liberalisation, but will proceed slowly. GDP per capita will fall in 2009 on account of lower global energy prices, but living standards will remain high and the country suffers from few social problems.

While lay-offs are likely to increase in number, particularly in the construction sector, most of those made redundant will be foreigners who will simply return to their home countries. Indeed, with most working Qataris employed in the public sector, their jobs are by and large secure.

The Qatari economy will continue to record robust real growth rates over the coming five years, largely on the back of an expansion in oil and gas production levels. That is not to say that lower oil prices will not be felt - nominal GDP will fall substantially in 2009, before rebounding in 2010.

The government will continue to pursue an expansionary fiscal policy, heavy on investment, which will help to support growth, though it could turn out a small budget deficit in FY2009/10. Thereafter, we forecast a return to robust surpluses. The inflation rate collapsed dramatically in Q109, and we expect price pressure to remain subdued over the course of the forecast period.

The banking sector's high exposure to the correcting domestic property market is a key risk to its overall stability, and so the government's latest intervention to purchase banks' real estate assets should provide considerable support. Risks to the sector persist, and as such we would not be surprised to see further government interventions over the coming months. Elsewhere, April's sovereign bond issue will provide a benchmark for corporate issuers and could help to open up the emirate's illiquid debt markets. This is likely to provide local corporates with greater flexibility in securing financing - currently companies typically follow the equity rather than the debt route.

Content

Executive Summary
One of The Better Performers This Year
Chapter 1: Political Outlook
- SWOT Analysis
- Bmi Political Risk Ratings
- Domestic Politics
- Continuity We Can Believe in
- Qatar Is Likely to Remain Politically Stable for The Foreseeable Future and We See No Change in The Al-Thani Family's Continued Rule.
Chapter 2: Economic Outlook
- SWOT Analysis
- Bmi Economic Risk Ratings
- Economic Activity
- High Growth Rates Driven by Hydrocarbon Sector
- The Qatari Economy Will Continue to Record Robust Real Growth Rates over The Coming Five Years, Largely on The Back of An Expansion in Oil and Gas Production Levels.
- Table: Economic Activity
- Monetary Policy
- Price Pressures Remaining Weak
- Inflation Will Remain Subdued over The Course of The Forecast Period, with A Rebalancing of The Supply-Demand Fundamentals in The Domestic Property Market Likely to Hold down Rental Rates, and Lower Oil Prices Curbing Money Supply Growth.
- Table: Monetar Y Policy
- Investment Climate
- Government Will Continue to Shore up Banks
- The Banking Sector's High Exposure to The Correcting Domestic Property Market Is A Key Risk to Its Overall Stability, and So The Government's Latest Intervention to Purchase Banks' Real Estate Assets Should Provide Considerable Support.
- Fiscal Outlook
- Healthy Fiscal Outlook over Long Term
- While Qatar's Government Could Turn out A Small Budget Deficit in Fy2009/10, IT Will Continue to Pursue An Expansionary Fiscal Policy, Heavy on Investment, and We Forecast A Return to Robust Surpluses in Future Years.
- Table: Fiscal Policy
Chapter 3: 10-Year Forecast
- The Qatari Economy to 2018
- Solid Long-Term Growth Prospects
- The Outlook for The Qatari Economy over The next Ten Years Is Very Positive, with Strong Growth, Including Continued Expansion of The Crucial Energy Sector and Substantial Current Account Surpluses.
- Table: Long -Term Macroeconomic Forecasts
Chapter 4: Special Report
- The Outlook for Global Banking
- Table: Loan-to-Deposit Rat Ios, Selected States
- Table: Loan Growth (% Chg Y-O-Y), Selected States
- Table: Commercial Banking Business Environment Rat Ings, Selected Stat Es
- Business Environment Rating Outlook
Chapter 5: Business Environment
- SWOT Analysis
- Bmi Business Environment Risk Ratings
- Business Environment Outlook
- Table: Bmi Business and Operat Ional Risk Rat Ings
- Institutions
- Table: Bmi Legal Framework Rat Ings
- Infrastructure
- Market Orientation
- Bmi Trade Rat Ings
- Operational Risk
Chapter 6: Key Sectors
- Real Estate
- Executive Summary
Chapter 7: BMI Global Assumptions
- Global Assumptions
- Table: Global Assumptions
- Table: Global & Regional Real Gdp Growth
- Table: Commodities
List of Tables
- Table: Qatar Political Overview
- Table: Middle East & Africa Annual Fdi Inflows
- Table: Top Export Destinations
- Table: Construction Industry Data, 2007-2013