Country Report Qatar June 2009

Outlook for 2009-10

• The emir will focus on addressing 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 9.6% in 2009 but surge to 23.5% in 2010, as new liquefied natural gas (LNG) projects come on stream, although nominal GDP will actually decline sharply 2009 owing to lower oil and gas prices.
• The official fiscal account (excluding most LNG revenue) will record a deficit of QR1bn (0.4% of GDP) in 2009/10 and a surplus of 3.5% in 2010/11. Were LNG included, there would be a surplus in both years, averaging 12.1%.
• Following a dramatic surge in consumer prices in 2008, which rose by an average of 15.1%, we forecast deflation of 2.8% 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$4.2bn surplus in 2009, widening to around US$21.2bn in 2010 as energy prices rise and gas export volumes surge.

Monthly review

• Qatar has restated its commitment to the planned GCC monetary union, after the UAE shook the project by withdrawing over a dispute about the location of the regional central bank.
• A second round of talks in Doha involving the JEM Sudanese rebel group were inconclusive. Qatar's mediation between Sudan and Chad faced a setback after an incursion by Chad into Sudan to attack Chadian rebels.
• A policy committee has been established to co-ordinate state-owned companies seeking debt or equity financing.
• Qatar Telecom is planning to issue up to US$5bn of bonds in the near future, and the Qatar Gas Transport Company will issue US$1bn, despite the weak state of the global financial markets.
• The government is considering measures to support the struggling real estate sector, following a sharp drop in property prices. Assistance could include renting empty properties and arranging debt-rescheduling with banks.
• Qatar Petroleum has signed a Memorandum of Understanding with two Chinese companies to establish an olefin petrochemical plant in Hainan province in China, using feedstock from Qatar's linear alkyl benzene plant.

This report covers the following industry codes:
SIC Code: 49;65
NAICS Code: 22;53