Country Report Qatar April 2009

Outlook for 2009-10

• The emir, Sheikh Hamad bin Khalifa al-Thani, will focus on calming economic concerns stemming from the global turmoil and boosting Qatar's prestige through its mediation efforts. Domestic political reform will not be a priority.
• Qatar will maintain an independent foreign policy, but it will broadly align itself with the rest of the Gulf Co-operation Council (GCC) with regard to relations with Iran.
• Real GDP growth will fall to 10.7% in 2009 but surge to 23.8% in 2009-10, as new liquefied natural gas (LNG) projects come on stream, although nominal GDP will decline by 21.3% in 2009 owing to falls in oil and gas prices.
• The official fiscal balance (excluding most LNG revenue) will record a deficit of QR6bn (1.9% of GDP) in 2009/10 and a surplus of 3% of GDP in 2010/11. Were LNG included, there would be a surplus in both years, averaging 11.4%.
• Inflation averaged 15.1% in 2008, and we forecast that it will ease to 9.2% in 2009 and 8.1% in 2010, as global commodity prices fall substantially and new housing stock becomes available.
• The current account will record a small surplus of US$0.7bn in 2009. This will widen substantially to around US$18.7bn in 2010 as energy prices rise and gas export volumes surge.

Monthly review

• Qatar and Saudi Arabia have signed a border demarcation agreement, after more than a decade of negotiations.
• Despite Qatar's efforts to foster Arab unity, the Arab League summit in Doha was marred by an outburst from Colonel Qadhafi of Libya, who hurled abuse at King Abdullah of Saudi Arabia and stormed out of the meeting.
• Qatar hosted eight South American heads of state, including the presidents of Brazil, Argentina and Venezuela, at a Arab-South American summit.
• The 2009/10 budget envisages a broadly unchanged level of spending, a 50% drop in revenue, based on an oil price of US$40/barrel, and a deficit of 1.8% of GDP. Our forecasts suggest that this budget is more realistic than usual.
• Vodafone Qatar has announced plans to sell 40% of its equity, worth QR3.4bn, through an initial public offering to Qatari citizens.
• The Qatari state has issued a US$3bn Eurobond, to raise financing for energy sector development, and Qatar Gas Transport Company is looking to raise US$1bn, through a mix of conventional and Islamic financing.
• A new Islamic bank, Qatar First Investment Bank, has been launched with a capital of QR3.6bn.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;48
NAICS Code: 52;517