Societe Generale: Qatar General Govt. Debt to GDP to Fall This Year & Next

The country's general government debt has been estimated to fall to 48% of GDP in 2020 and 43.1% in 2021 from 53.2% in 2019, the French multinational investment bank said in an economic update Qatar’s general government debt has been estimated to fall to 48% of GDP in 2020 and 43.1% in 2021 from 53.2% in 2019, French multinational investment bank Societe Generale has said in a country update. The country’s general government debt was also estimated to have grown to 53.2% of GDP in 2019, from 48.6% a year earlier, as the country continued to borrow in international markets, Societe Generale said citing IMF data.

According to Societe Generale, Qatar's economy started to grow faster after the first quarter of 2019 as government spending rose, particularly with regards to wages in the public sector. This helped boost the economy later in the year, which had showed signs of a slowdown as most major infrastructure and construction projects in relation to the World Cup came to completion.
Current account surplus narrowed to 2.4% of GDP in 2019 from 8.7% a year earlier as global energy prices fell.

The IMF expects this trend to be heavily affected by the negative economic impact of the Covid-19 pandemic and the fall in oil prices, the current account balance should be negative in 2020 and 2021 (-1.9% and -1.8%, respectively).

However, Societe Generale noted the expected commissioning of Barzan natural gas facility could support domestic gas production and contribute positively to growth.

In the medium term, the expansion of North Field gas projects is expected to be completed by 2024, further boosting gas output. Qatar has been implementing an economic diversification program to lower its dependency on the hydrocarbon sector.

Also, new projects are planned in infrastructure and telecommunications, and various construction projects are in progress in preparation for the FIFA World Cup 2022. Inflation was estimated to have fallen to -0.6% last year from 0.2% in 2018. The International Monetary Fund estimated inflation to decrease to -1.2% in 2020 and increase to 2.4% in 2021 in its latest World Economic Outlook of April 2020. Qatar has postponed plans to introduce a VAT, suggesting inflation will continue to remain weak this year, Societe Generale said.

Qatar is the world's leading exporter of liquefied natural gas and holds the third largest gas reserves in the world (estimated at 16% of the global total). The country’s economy is thus heavily concentrated in the gas industry, which represents two-thirds of its GDP and almost 80% of export earnings, Societe Generale said. Like other GCC countries, Qatar has been hit by the global decline in oil prices since 2014. “However, the economic results have been better than that of its neighbors, due to successful economic diversification, namely via the development of large-scale projects,” Societe Generale noted.