Country Report Qatar July 2009

Outlook for 2009-10

• The emir will focus on addressing economic concerns stemming from the global turmoil and boosting Qatar's prestige through a policy of mediating in international conflicts. 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 a still strong 9.2% in 2009 but surge to 23.8% in 2010, as new liquefied natural gas (LNG) projects come on stream, although nominal GDP will actually decline in 2009 owing to lower oil and gas prices.
• The official fiscal account (excluding most LNG revenue) will record a surplus of QR9bn (US$2.4bn, or 2.5% of GDP) in 2009/10 and of 6% in 2010/11. Were LNG included, the surplus would average 14.2% over the forecast period.
• Following a dramatic surge in consumer prices in 2008, when they rose by an average of 15.1%, we forecast deflation of 1.4% in 2009, driven by falling rents and commodity prices. Consumer prices will begin to rise once more in 2010.
• The current account will record a US$7.9bn surplus in 2009, widening to around US$25.6bn in 2010 as energy prices rise and gas export volumes surge.

Monthly review

• A number of ministries and agencies have been restructured to improve administrative efficiency. The Customs and Ports Authority has been disbanded and the Ministry of Business and Trade has been expanded.
• Together with Saudi Arabia, Kuwait and Bahrain, Qatar has signed an agreement re-affirming commitment to establishing a monetary union.
• The government has continued to bolster local banks, buying QR15bn of their real estate loans.
• Qatar Telecom has boosted its financing after successfully issuing US$1.5bn of medium-term notes, and the Qatar Gas Transport Company has raised US$950m in syndicated bank loans.
• NYSE Euronext has bought a 20% stake in the Doha Securities Market, which is being renamed Qatar Exchange and will utilise NYSE's technology to launch a derivatives exchange.
• Provisional first quarter data show a 17.5% year-on-year fall in nominal GDP, due to a fall in the contribution of the oil and gas and manufacturing sectors. Stimulus spending lifted government services by 81% over the last quarter.
• The slump in the South Korean LNG market, and lower than expected demand in the UK, is forcing Qatar to seek new customers and spot market sales.

This report covers the following industry codes:
SIC Code: 60;70
NAICS Code: 52;72