IMF Outlook Acknowledges Qatar’s Diversification Story

IMF Oct 2014 economic outlook has stated that activity in the Gulf Cooperation Council (GCC) economies accelerated slightly in the second half of 2013 and into 2014, driven by higher oil production and government spending. In the GCC countries, growth is projected to average about 4.5 percent in 2014–15, with non-oil GDP growing by 6 percent and oil GDP rising by 1 percent. Inflation is expected to remain contained in most countries, particularly in the GCC, in light of softening global food prices and pegged exchange rates. The overall fiscal balance of the GCC countries is projected to decline from two per cent of GDP in 2014 to one per cent in 2015.

Saudi Arabia is expected to grow by 4.6 percent in 2014 and 4.5 percent in 2015 respectively, according to IMF Oct 2014 economic outlook. The non-oil private sector as well as state spending will enable Saudi Arabia to improve its economic growth this year. Saudi Arabia is expected to have an annual inflation of 2.9 percent in 2014, according to IMF Oct 2014 economic outlook. The inflation rate in Saudi Arabia was at 2.80 percent in August of 2014.

The IMF Oct 2014 economic outlook that UAE is expected to grow by 4.3 percent in 2014 and 4.5 percent in 2015 respectively. The UAE economy remains solid on the back of both the hydrocarbon sector and the non-hydrocarbon sector. The diversification policy constitutes an important pillar of the economic performance. Dubai has taken the lead in diversification and has established itself as a service economy and a centre for finance, real estate, tourism and logistics. The contribution of the hydrocarbon sector to Abu Dhabi’s GDP was at 51.4 percent in 2013. Abu Dhabi’s non-oil economy grew at a compound rate of 6.9 per cent a year in the five years to 2012 and lifted the share of the emirate’s economy unrelated to hydrocarbons to 48 per cent.

Qatar is expected to grow by 6.5 percent in 2014 and 7.7 percent in 2015 respectively, according to IMF Oct 2014 economic outlook. The last forecast from General Secretariat for Development Planning, Qatar had indicated that Qatar’s economy is likely to grow 6.3 percent this year and reach 7.8 percent in 2015. Brisk, double-digit, expansion in the non-oil and gas economy is also expected in 2014 and 2015. Qatar’s economic growth picked up slightly to 5.7 percent on an annual basis in the second quarter of this year as robust non-oil activity outweighed a decline in the hydrocarbon sector. The above economic trends indicate that recent IMF outlook acknowledges the fact that Qatar’s non –hydrocarbon diversification is going to be the driver of Qatar’s economic growth. Qatar is expected to have an annual inflation of 3.4 percent in 2014, according to IMF Oct 2014 outlook. Qatar inflation arose to 3.8 percent in August 2014 on rising rents and food prices.

According to IMF Oct 2014 outlook, Kuwait is expected to grow by 1.4 percent in 2014 and 1.8 percent in 2015 respectively. Oman is expected to grow by 3.4 percent both in 2014 and 2015 respectively. Bahrain is expected to grow by 3.9 percent in 2014 and 2.9 percent in 2015 respectively.

GCC GDP at Current prices is expected to grow by 3.7 percent in 2014 to US$ 1.7 tn
GCC Current account balance as a percentage of GDP at Current prices is expected to be close to 18 percent for 2014.The GDP at Current price for Saudi Arabia, UAE, Kuwait, Oman, Qatar and Bahrain in 2014 is expected to be close to US$778bn, US$ 416bn, US$179bn, US$80bn, US$212bn and US$34bn respectively. The Current account balance as a percentage of GDP at Current prices for Saudi Arabia, UAE, Kuwait, Oman, Qatar and Bahrain in 2014 is expected to be close to 15 percent, 11 percent, 41 percent, 10 percent, 27 percent and 7 percent respectively.