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FY 1999: Qatar |
II. ECONOMIC TRENDS AND OUTLOOKMajor Trends and Outlook
Qatar's oil-based economy entered into a gradual recovery phase in the mid-1990's, after a period of stagnation in the late 1980's and early 1990's. In 1996, the country's Gross Domestic Product (GDP) was officially estimated to have increased by 3 percent from the 1995 level of QR 29,622 million (USD 8138 million). In 1995, the GDP had increased substantially by 10.4 percent over the 1994 level. The State-owned Central Statistical Organization (CSO) has yet to issue national accounts and foreign trade statistical data for the years 1997 and 1998. Tables 2.1 through 2.3 show input and growth rates of all sectors to Qatar's GDP during the period 1992-1996, the latest figures available from official sources. Principal Growth Sectors: The Government of Qatar's economic advisors believe that economic performance will maintain slow but satisfactory progress throughout the first five years of the next century, when revenues from export of Liquefied Natural Gas (LNG) will start to feed the Government of Qatar's ambitious development plans. Combined revenues from both oil and LNG exports should place Qatar among the richest nations (per capita) of the world before the year 2010. Qatar's entry into international LNG markets in December 1996 marked a significant turning point in the country's economic history. Financed heavily by Japanese banks, Qatar's LNG industry has reached maturity in record time. LNG shipments to Japan are already being made at the rate of six million metric tons per year. Orders for a similar amount to South Korea are already in place and actual shipments are scheduled to start in early 1999. Other orders are under consideration. As per agreement with the Japanese banks financing the LNG projects, revenues from LNG exports will be largely dedicated to debt service throughout the first eight to nine years of production. The greatest economic benefits will begin to flow to Qatar only after these debts are repaid. Until then, and in view of current low prices of oil in the international market, the Qatari economy will have to cope with acute financial constraints. --------------------------------------------------------------- Table 2.1: Input And Growth Rates Of All Sectors Of Qatar's GDP (1992 And 1993) (Latest available data) (All values in millions of QR) --------------------------------------------------------------- USD 1.00 = QR 3.64 as set by the Government of Qatar since June 1980 --------------------------------------------------------------- Economic Sector Value Share Change Value Share Change (%) From From Previous Previous Year (%) Year (%) --------------------------------------------------------------- 1992 1993 --------------------------------------------------------------- Oil Sector 9,969 35.8 22.3 8,495 32.6 -14.8 Other Sectors 17,863 64.2 5.7 17,555 27.4 -1.7 Other Sectors Breakdown: Agriculture & Fishery 269 1.0 13.0 281 1.1 4.5 Industry 3,218 11.6 -3.6 2,887 11.1 -10.3 Electricity and Water 317 1.1 2.6 333 1.3 5.0 Construction 1,199 4.3 16.5 1,196 4.6 -0.3 Trade/Hotel 1,842 6.6 10.0 1,827 8.0 -0.8 Transportation 864 3.1 12.4 948 3.6 9.7 Finance/Insurance /Real Estate 3,180 11.4 12.2 3,003 11.5 -5.6 Other Services 6,974 25.1 3.9 7,080 27.2 1.5 Total 27,832 100 11.1 26,050 100 -2.4 ----------------------------------------------------------------- ----------------------------------------------------------------- Table 2.2: Input And Growth Rates Of All Sectors Of Qatar's GDP (1994 and 1995) (Latest available data) (All values in millions of QR) ----------------------------------------------------------------- USD 1.00 = QR 3.64 as set by the Government of Qatar since June 1980 ----------------------------------------------------------------- Economic Sector Value Share Change Value Share Change (%) From From Previous Previous Year (%) Year (%) ----------------------------------------------------------------- 1994 1995 ----------------------------------------------------------------- Oil Sector 8,583 32.0 1.0 10,933 36.9 27.4 Other Sectors 18,260 68.0 4.0 18,689 63.1 2.3 Breakdown (Other Sectors): Agriculture and Fishery 283 1.0 0.7 291 1.0 2.8 Industry 2,949 11.0 2.1 2,488 8.4-15.6 Electricity and Water 403 1.5 21.0 379 1.3 -6.0 Construction 1,719 6.4 43.7 1,963 6.6 14.2 Trade/Hotel 2,008 7.5 9.9 2,316 7.8 15.3 Transportation 1,019 3.8 7.5 1,089 3.7 6.9 Finance/Insurance /Real Estate 3,058 11.4 1.8 3,222 10.9 5.4 Other Services 6,821 25.4 -3.7 6,941 23.4 1.8 Total 26,843 100 3.0 29,622 100 10.4 ----------------------------------------------------------------- ----------------------------------------------------------------- Table 2.3: Input And Growth Rates Of All Sectors Of Qatar's GDP (1996) (Latest available data) (All values in millions of QR) ----------------------------------------------------------------- USD 1.00 = QR 3.64 as set by the Government of Qatar since June 1980 ----------------------------------------------------------------- Economic Sector Value Share Change Share Change (%) From (%) Previous Year (%) ----------------------------------------------------------------- 1996 1992-96 ----------------------------------------------------------------- Oil Sector 11,120 36.4 1.7 34.9 11.5 Other Sectors 19,398 63.6 3.8 65.1 8.6 Breakdown (Other Sectors): Agriculture and Fishery 315 1.0 8.2 1.0 17.1 Industry 2,737 9.0 10.0 10.1 -14.9 Electricity and Water 415 1.4 9.5 1.3 30.9 Construction 1,968 6.4 0.3 5.7 64.1 Trade/Hotel 2,320 7.6 0.2 7.3 26.0 Transportation 1,167 3.8 7.2 3.6 35.1 Finance/Insurance /Real Estate 3,405 11.2 5.7 11.3 7.1 Other Services 7,071 23.2 1.9 24.8 1.4 Total 30,518 100 3.0 100 9.7 ----------------------------------------------------------------- Agriculture: High value U.S. food products with strong market potential in Qatar include processed fruits, and vegetables, frozen chicken parts, snack foods, frozen beef, fruit juices, breakfast cereals, cheeses, seafood, almonds, packaged rice and other miscellaneous food products, particularly hot sauces, salad dressings, catsup, mayonnaise, vinegar, iodized salt and coffee whiteners. Also, growth in the local food processing industry is driving up demand for semi processed products particularly beverage bases and a variety of food ingredients. Government Role in the Economy: The outlook for Qatar's economic performance will be linked to the relatively higher rate of oil production from both on and offshore fields. The Government of Qatar forecasts oil production of 850,000 barrels per day in the year 2000. Production enhancement programs have already succeeded in increasing oil production to over 500,000 barrels per day. However, this increased production, even if coupled with higher oil prices, which is not currently the case, will not alleviate the Government of Qatar's current financial difficulties and budgetary deficits in the near future. In Qatar, the government is the largest end-user of a wide range of imported products and services. Activity in the private sector continues to be extremely sensitive to government spending. Balance of Payments Situation: As indicated in Table 2.4 (obtained from the Qatar Central Bank), the 1996 surplus in balance of trade has increased to QR 4,095 million (USD 1,125 million) from QR 1,714 (USD 471 million) in 1995. This substantial increase was not prompted by a compatible decrease in the country's level of imports. In fact, Qatar's imports increased from QR 9,737 million in 1995 to QR 10,844 million in 1996. The substantial increase in 1996 balance of trade surplus was due to a sizeable increase in the country's exports from QR 11,451 million (USD 3,146 million) in 1995 to QR 14,939 million (USD 4,104 million) in 1996. Contrary to the balance of trade, the services and private transfers deficit has risen from QR 8,441 million in 1995 to 9382 million in 1996. Also known as the invisible accounts, the services and private transfers deficit has had a negative impact on the country's current accounts position. However, the sizeable increase in the balance of trade made up for a large portion of the deficit under this sector. Consequently, the current accounts decreased from QR 6,727 in 1995 to QR 5,287 in 1996. ---------------------------------------------------------------- Table 2.4: Qatar's Balance Of Payments (1992 to 1996) (Latest available data) (All values in millions of QR) --------------------------------------------------------------- USD 1.00 = QR 3.64 as set by the Government of Qatar since June 1980 --------------------------------------------------------------- Item 1992 1993 1994 1995* 1996* --------------------------------------------------------------- (1) Trade Balance 6,644 5,154 4,729 1,714 - 6,204 Exports (fob) 13,980 11,280 10,851 11,451 11,859 Imports (fob) - 7,336 - 6,126 - 6,122 - 9,737 - 18,063 (2) Service Transfers and Private transfers (Net) - 6,675 - 7,553 - 6,556 - 8,441 - 8,852 (3) Current Account (1) + (2) - 31 - 2,399 - 1,827 - 6,727 - 13,056 (4) Capital Transfers (Private/Official) - 400 2,377 - 138 4,878 11,811 (5) Surplus/Deficit in Balance of Payment (3) + (4) - 431 - 22 - 1,965 - 1,849 - 1,245 (6) Change in Reserves (Increase/Decrease) 431 22 1,965 1,849 1,245 --------------------------------------------------------------- * Estimates The third component of the balance of payments, namely the net capital transfers (private and official) includes net foreign borrowing and repayments with official and private investments. This component which witnessed deficits worth QR 400 million and QR 138 million in 1992 and 1994 respectively showed a large surplus worth QR 4,878 million in 1998, which decreased to QR 2,863 million in 1996. Integrating one another, the developments of the above components of the balance of payments in 1992-96 have had a negative impact on the following two areas: * The monetary sector transactions as represented by the net foreign assets of the banking sector in Qatar. * The Government monetary assets. Consequently, the balance of payments deficit continued to show a sharp increase worth QR 1,965 million, QR 1,849 and QR 2,424 million in 1994, 1995 and 1996 respectively. It should be noted that all above figures, as shown in Table 2.4, are estimates. A more accurate image may be revealed if actual data and debts were included. However, December 1997 witnessed Qatar's first shipment of LNG to Japan. Qatar's offshore North Field is described as the largest single reservoir of non-associated natural gas in the world. To finance the on-going development of the North Field, the State-owned Qatar General Petroleum Corporation (QGPC) has resorted to loans from Japanese and other international banks. Revenues from LNG exports will settle the LNG projects loans, but it will only be during the second half of the first decade of the new century that LNG exports will yield some real revenue to Qatar. Until then, Qatar's chronic financial difficulties and related balance of payments deficit may witness some sharp increase.[end of document]
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