2012-10-13 05:46:01 - New Country Reports market report from Business Monitor International: "Qatar Business Forecast Report Q4 2012"
Core Views Qatar's short-term political risk profile remains among the most stable in the region. Despite enjoying little in the way of democratic freedom, Qataris benefit from massive hydrocarbon wealth that is spread generously across the country's native population and enjoy the highest per capita GDP in the world. A small population - and one without much inclination to protest against the government - will keep the country insulated from large-scale public unrest in the immediate term. Qatar is likely to continue its efforts at enhancing its international investment position over the coming years. We are forecasting a current account surplus of 34.4% of GDP in 2012 and, in spite of our expectation of moderating global energy prices, forecast an
average of 26.9% of GDP over the 2012-2016 period, facilitating further outflows of capital from the small Gulf state. Major Forecast Changes We forecast real GDP growth to come in at 7.8% in 2012 and 7.3% in 2013, compared with our previous forecasts of 7.9% and 6.9% for 2012 and 2013 respectively. As a result of larger-than-expected wage increases and given our view that deflation in the housing market will ease, we forecast average inflation of 2.9% and 4.1% in 2012 and 2013 respectively, compared with an estimated 1.9% in 2011. That said, as oversupply in the housing market is set to moderate more slowly than we previously expected, we have lowered our forecasts for consumer price inflation, from 3.8% in 2012 and 4.3% in 2013 previously. Key Risks To Outlook Given the economy's heavy reliance on the hydrocarbon sector, a pronounced global economic downturn - if it were to translate into a sustained drop-off in demand for oil and gas - could impact negatively on our forecasts for Qatar's external account position, budget and growth outlook. That said, we highlight that the country's US$100bn sovereign wealth fund - as well as its continuing ability to tap international debt markets - provides the economy with significant bulwarks against these risks. The Qatari government's increasingly assertive foreign policy raises some risks in relation to the outlook for regional political stability. In particular, we highlight the potential for the country's foreign policy to provoke a backlash in the region and the danger that the government could become bogged down in a drawn-out conflict in the Middle East.
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