(MENAFN- The Peninsula)
Joel Johnson
|
The Peninsula
DOHA: Analysts at Fitch Solutions state that Qatar's growing GDP, from an estimated 2 percent in 2024 to 2.6 percent in the current year, is driven by robust activities in both the hydrocarbon and non-hydrocarbon sectors.
A recent report by the data and analytical platform notes that while stronger Q3 2024 non-hydrocarbon growth prompted a revision of the current year forecast for growth in this sector to 3.6 percent, this was offset by the weaker-than-expected performance in the hydrocarbon sector.
“We anticipate that the non-oil sector will largely benefit from a pickup in investment and construction activity,” the report said.
However, downside risks are expected to continue and include higher interest rates, lower energy revenues, and delays in infrastructure projects among other geopolitical tensions.
Researchers stress that“We maintain our forecast that Qatar's real GDP growth will come in at 2 percent in 2024 and accelerate to 2.6 percent in 2025, despite Q3 2024 data surprising slightly to the upside. Real GDP growth came in at 2 percent y-o-y in Q3 2024, marginally above our forecast of 1.8 percent y-o-y, mainly due to a downward revision to Q3 2023 GDP.”
On the other hand, while the quarterly non-hydrocarbon sector performance was from the researcher's perspective, the revision to historical data led to stronger y-o-y growth in the non-hydrocarbon sector (4.5 percent against Fitch Solution's forecast of 3.3 percent).
Meanwhile, the third quarter of 2024 performance in the hydrocarbon sector stood weaker than its expectation, reducing Fitch Solution's prediction for the final quarter of last year per annum headline growth from 4.1 percent to 3.6 percent. This still reflects a sustained acceleration in headline growth.
Market experts say that“In 2025, we continue to expect that stronger performance in both the hydrocarbon and non-hydrocarbon sectors will drive an acceleration in headline real GDP growth.”
On the other hand, Q3 2024 data has made analysts in the country more optimistic about the non-hydrocarbon sector this year as Fitch Solutions predicts that the growth will boost to 3.6 percent in 2025, compared to the analytical platform's previous forecast of 3.2 percent.
The report also highlights that several factors will help sustain the improvement in non-hydrocarbon growth in 2025. In terms of the lower interest rates, it said“The Qatar Central Bank will cut the policy rate by 120 basis points this year and will incentivise credit demand, driving stronger growth in the financial services sector this year.”
“This, aided by the authorities' new measures to bolster the non-hydrocarbon private sector, particularly small and medium businesses, by reducing fees and taxes, writing off loans, and providing short-term financing, will offer a tailwind to private investment activity. Lower interest rates, along with the normalisation in rental costs post the FIFA World Cup surge, will also help boost households' purchasing power and credit-based demand, the report added.
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