Qatar is one of the fastest growing economies in the MENA region, underpinned by the expansion in natural gas production. As of 2011, Qatar stood as the world’s largest producer and exporter of LNG with an annual production capacity of 77 million tons, compared to 30 million tons in 2008. A moratorium on increasing gas production until 2015 is likely to taper off growth in the hydrocarbon sector over the medium term. Meanwhile, the government is expected to maintain high levels of capital spending on education, health, and transport to support the non-hydrocarbon sector as part of its long-term strategy to achieve economic diversification, as outlined in its 2030 vision. The project pipeline is estimated at USD180 billion until 2030, with the bulk of project awards in infrastructure and construction, now that most hydrocarbon expansion plans are complete. This includes the New Doha International Airport, a new seaport, metro and light-rail systems, stadiums, and mixed-use development projects. Despite higher government expenditure, both fiscal and current accounts will remain in surplus on the back of higher oil prices and the expected increase in LNG volumes. Qatar remains politically stable and a relatively open and tolerable society. The main risk to the outlook is a substantial decline in oil prices or delays in LNG export deliveries.
The Qatari market was the third worst performer in the MENA region during 2012, falling by about 5%. Non-Qataris were net-sellers during the year, and sectors in Qatar witnessed mixed performances during 2012. The financial services, real estate, and transportation sectors were the negative performers during the year, while the insurance, telecoms, industrials, and consumer goods and services sectors performed positively. By the end of 2012, Qatar traded at 10.4x P/E for 2012e below its five-year median P/E of 11.2x, and below the emerging market average of 14.0x for 2012e. We assign Qatar an overweight outlook for 2013, on political stability and ongoing large government spending, which act as key attractions in Qatar.
|Key Indicators (2011)|
|Nominal GDP (USD bn)||173.5||Population (mn)||1.7|
|Real GDP growth (%)||14.1||Population growth (%)||2.0|
|GDP per capita (USD)||102,059||Inflation (y-o-y %)||1.9|
|Sectors||M2 growth (y-o-y %)||17.1|
|Services||27.7||Exchange rate (USD/QAR)||3.6|
|Industry||14.1||Current account (% of GDP)||30.0|
|Agriculture||0.1||Net Foreign Assets (USD bn)||4.8|
|Oil & Gas||58.1|