QNB Capital: Qatar 2011 GDP Up on LNG

QNB Capital said in a report that it estimates that Qatar’s nominal GDP reached QR 628bn (US$172bn) in 2011.

This equates to 2.5% of global GDP and 12.5% of GDP in the GCC. Qatar’s share of global and regional GDP has risen from 2.0% and 11.8% in 2010, respectively. This is a consequence of exceptionally fast nominal GDP growth of around 48.6% in Qatar’s oil and gas sector in 2011, which has led to overall nominal growth estimated at 35.4%, QNB Capital said.

Oil and gas nominal GDP growth has been particularly rapid as a result of a combination of increasing production and rising prices.

QNB Capital said that it estimates that capacity expansions in production of liquefied natural gas (LNG) and gas-to-liquids (GTL) will have led to an increase in total gas production of 27.3% in 2011. Rising gas output will have boosted production of natural gas liquids and condensates (high-quality liquid hydrocarbons that are prevalent in Qatar’s gas fields) by around 30.4%.

Energy prices also play a key role in nominal GDP growth. The average price of Brent, an international benchmark for crude oil prices, increased by 39.5% in 2011. The average sales price of LNG is highly correlated with Brent.

Rising energy prices have also driven a strong increase in the trade surplus, which QNB Capital estimates has risen 55.1% to US$79.3bn in 2011 with hydrocarbons accounting for 85.0% of exports.

In terms of real GDP growth, the rising hydrocarbons production volumes in 2011 equate to an estimated real growth of 18.2%. Real GDP growth in the non-hydrocarbons sector has also been strong at around 19.7%, leading to overall real growth of an estimated 19.0%. The services sector dominates the non-hydrocarbons economy and grew rapidly at 18.2% in 2011 as oil and gas revenue has filtered through the economy, boosting growth in all sectors from hospitality to financial services, public administration and logistics.

The manufacturing sector also supported real GDP in 2011, growing by an estimated 32.5% as expansion programmes continued in a number of sectors such as GTL, metals production, fertilisers and petrochemicals.

Strong government expenditure, which QNB capital estimates will grow by 17.4% to reach QR167bn (US$45.9bn) in the 2011/12 budget year will also support real growth throughout the economy. In particular, increases in salaries will support current expenditure and spending on major projects will drive growth in capital expenditure.

Looking forward, growth in the hydrocarbons sector is likely to moderate in 2012-13. QNB Capital expects average oil prices to be slightly weaker, at US$108/barrel in 2012-13, mainly owing to the moderate outlook for global growth and, therefore, for oil demand. Therefore, QNB Capital expects real hydrocarbons growth to be at a compound annual rate (CAGR) of 4.0% in 2012-13 and nominal hydrocarbons growth at 4.8%, QNB Capital said.

The non-hydrocarbons sector is likely to boost overall growth with real growth and nominal growth forecast at a CAGR of 9.5% and 11.5% in 2012-13, respectively. This will lead to a shift from oil and gas accounting for 85.6% of the incremental increase in nominal GDP in 2011 to only accounting for 45.6% in 2013.

QNB Capital said it forecasts that the increasing importance of the non-hydrocarbons sector in GDP growth will be driven by a range of sub-sectors, particularly the services sector. In real terms, the financial services sector is expected to account for the largest share (22.0%) of growth as it benefits from financing opportunities for major projects and broader growth throughout the economy. Strong government expenditure growth will support government services. Ongoing building plans will continue to support growth in the construction sector and further expansions are expected in manufacturing sectors.

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LNG World News Staff, February 27, 2012; Image: Qatargas