Country Report Qatar September 2009

Outlook for 2009-10

• The emir will focus on addressing economic concerns stemming from the global recession, but is unlikely to pursue any substantive domestic political reform during the forecast period.
• Qatar will maintain an independent foreign policy, and will maintain a high profile as a result of its mediation efforts in various countries. Balancing its conflicting relations with the US and Iran will remain the top priority.
• Real GDP growth will fall to a still strong 9.2% in 2009 but surge to 24.5% in 2010, as new liquefied natural gas (LNG) projects come on stream. Nominal GDP, however, will decline in 2009 owing to lower oil and gas prices.
• The official fiscal account (excluding most LNG revenue) will record a surplus of QR13bn (US$2.4bn, or 3.6% of GDP) in 2009/10 and of 8.5% in 2010/11. Were LNG included, the surplus would average 14.7% in 2009-10.
• Following a record 15.1% surge in consumer prices in 2008, we forecast mild deflation of 2.8% in 2009, driven by the fall in rents and commodity prices in the first quarter. Prices are now rising, and inflation will be 4.1% in 2010.
• The current account will record a US$4.6bn surplus in 2009, widening to around US$19.8bn in 2010 on higher energy prices and gas export volumes.

Monthly review

• A series of administrative reforms have partly reversed the corporatisation of public services and agencies by placing organisations such as Kahramaa, Ashghal and the Qatar News Agency under the control of relevant ministries.
• Hassad Food, a Qatari state investment firm, is planning to invest US$500m in agricultural firms, including in Argentina, Brazil and Sudan, taking an alternative strategy to other Gulf countries that directly lease land.
• The Qatar Gas Transport Company has announced plans to utilise the dry dock facilities, being constructed for its LNG vessel fleet, to begin a small-scale shipbuilding business in 2010.
• Qatar has bailed out a group of private Qatari investors who failed to fulfil their commitment to purchase Polish shipyards. The move was aimed at protecting their reputation and placating Poland, a future LNG customer.
• RasGas's first 7.8m t/y LNG "super-train" came on stream on August 12th, although global prices for LNG remain heavily depressed.
• The China National Offshore Oil Corporation signed a 25-year exploration and production-sharing agreement for the offshore Block BC, which may have sizable reserves but is difficult to access because of the geological formation.
• Qatar has taken a 6.8% stake in Volkswagen, and plans to increase its holding.

This report covers the following industry codes:
SIC Code: 49;47;37
NAICS Code: 22;48;336