Q4 2015 Qatar Market Report: Economic Overview
The price of crude oil fell to $36 per barrel by the end of 2015, a drop of more than 50% since mid-2014. The severity of the drop has resulted in a government budget for 2016 that dramatically cuts expenditures as a fiscal deficit is forecast for the first time in 15 years.
Projected expenditure for 2016 is QAR202.5bn, a fall of QAR15.9bn from the estimates for the previous fiscal year.
Projected revenues for 2016 are QAR150.6bn, down from QAR225.7bn estimated for 2015. The projections for 2016 are based on the assumption that the average oil price for the year is $48 per barrel.
The Ministry of Development Planning and Statistics confirmed in December that the country’s economy is expanding at a lower rate than previously forecast. In June the Ministry had predicted GDP growth at 7.3% for 2015, these have now been revised down to 3.7%. Due to the performance of the Hydrocarbon sector, GDP growth is driven exclusively by the non-oil and gas sectors, where an estimated growth rate of 9.5% is expected for 2015.
Despite the fall in oil and gas revenue, the Minister of Finance recently confirmed that despite looking to maximize efficiencies, major infrastructural projects will progress as
planned to help maintain economic growth. The current cost of projects that are underway is QAR261bn, which excludes projects in the energy and private sectors. The total cost takes into account QAR87bn on transportation, including Qatar Rail and QAR54bn on other infrastructure.
In anticipation of a budget deficit in 2016 the Minister confirmed that Qatar will finance any shortcomings through debt instruments in local and international finance markets. Qatar does not expect to tap into its national savings or liquidate assets.
Based on QSA figures, the population hit a high of 2.46 million in November 2015. This represented a 12 month increase of 10.2%. The increasing population continues to generate demand for new residential real estate development, especially to cater for the lower to middle income demographic. It has also been fueling growth throughout various sectors of the economy, not least in services such as finance, hotels and restaurants, and trade and transport.
According to the MDPS Qatar Economic Outlook 2015 – 2017, inflation is forecast to average 2% in 2015. The annual inflation rate in Qatar averaged 3.56% from 2005 until 2015.
The major concern in relation to Qatar’s inflation rate has been the housing market, where rents have been increasing due to an undersupply of accommodation. There are also major
concerns about construction cost inflation, which according to an independent report by EC Harris could potentially peek at 18% during a World Cup building boom between 2016 and 2019.
For more insight and further information, please click the link below to download the full report.
Click here to start your property search and find your apartment or villa for rent in Doha today.