Qatar’s economy is set to enter a period of accelerated growth, supported by several factors including expansion of Liquefied Natural Gas (LNG) capacity, robust policy response from the government to tackle COVID-19, and the upcoming football world cup, according to a report released by BofA Global Research, yesterday.
“We see Qatar entering a period of accelerated growth on the back of multiple factors. QNB, being the national banking champion, should be a key beneficiary, with earnings expected to grow at 15 percent Compound Annual Growth Rate (CAGR) to 2025,” said the report.
“More specifically, we see Qatar’s economic recovery accelerating in the coming years, with real GDP growth set to reach 7 percent CAGR (2021-25), the highest among the Middle East - North Africa (MENA) markets that we cover,” it added.
A strong and pro-active health response from authorities in Qatar has played an important role in containing the pandemic. The rapid pace of vaccination has brightened the prospects for lifting of restrictions as per plans which would further increase economic activity in the country.
Qatar is moving ahead in full steam with its expansion plans in the energy sector. The country has embarked on an ambitious LNG capacity expansion plan. The two-phase North Field Expansion project will see Qatar LNG capacity to increase from 77 million tonnes per annum (mtpa) to 126mtp by 2027, showing an increase of around 63 percent.
The first phase of expansion will include expansion of LNG capacity from 77 mtpa to 110 mtpa by 2025 while the second phase will take LNG capacity to 126 mtpa by 2027.
Qatar LNG expansion plans could have important economic and market implications over the medium-term. Qatar’s heavy investment in vertically integrated LNG infrastructure, downstream, shipping, re-gasification infrastructure, as well as its location, structural cost advantage and economies of scale have allowed it to become the world’s largest LNG exporter
“Qatar’s renewed LNG expansion plans could have important economic and market implications over the m e d i u m - t e r m . Q a t a r Petroleum (QP) is planning to increase LNG production capacity in 2027 by 63 percent to 126mtpa. We estimate the economy could now double in size, with nominal GDP reaching $300bn by 2027. This is likely to boost sovereign creditworthiness, economic activity and twin surpluses,” said the report.
As per the report, the planned expansion to LNG capacity should boost activity through boosting hydrocarbon real GDP growth over 2025-27; and, boosting non-hydrocarbon real GDP growth through higher investments over 2022-2027.
