Qatar’s GDP growth to remain at 5% until 2017 despite oil shock: Moody’s

Qatar’s real gross domestic product (GDP) growth is expected to remain stable at five percent until 2017, supported by the growth of its non-hydrogen sector, Moody’s Investors Service said in a report.

The sector’s growth has been led by the service and construction industries and boosted by government investments in preparation for the 2022 World Cup. The country’s Barzan project is also expected to contribute to economic activity when it comes on line, adding about 21 percent to pipeline gas production.

The gross value added by the non-hydrogen economy grew by 8.1 percent during the first half of 2015, while the hydrogen sector declined by 0.6 percent year-on-year.

However, the ratings agency warned that lower oil prices would negatively impact government revenue streams.

"Qatar Petroleum's (Aa2 stable) profits, which accounted for 33 percent of total government revenues in 2014, will likely decline, although they will remain at fairly high levels,” said Steffen Dyck, a VP senior analyst at Moody’s predicted.

Moody’s forecast of Brent crude oil prices averaging $53 in 2016, would likely reduce Qatar’s fiscal surplus to 2.4 percent next year from 6.4 percent in 2015.

“Qatar's debt-to-GDP ratio, projected to reach about 35 percent in 2016, is higher than the median for similarly-rated peers,” the report said. “In addition, interest payments as a share of government revenues, a measure of debt affordability, are in line with the rating peer group median,” it added.