Building boom behind growth in Qatar economy

Qatar’s economy continued to show year-on-year growth in the first quarter of 2015 despite a slowdown in the hydrocarbon sector.

A report by Qatar National Bank stated that the economy experienced year-on-year growth of 4.1 per cent to the end of March, spurred on by a building boom as it continues to launch new projects.

“The non-hydrocarbon sector continues to be the engine of growth in the economy, expanding by 8.9 per cent year-on-year in the first quarter,” QNB said in its report. “The largest contributors to non-hydrocarbon growth were construction, financial services and manufacturing.”

Construction was the fastest-growing of these sectors, with activity increasing by 11.4 per cent fuelled by work on mega-projects like the Doha Metro, the Msheireb Downtown Doha development, the US$50 billion Lusail City project to the north of Doha and a series of ongoing roads, highways and infrastructure projects.

“The implementation of infrastructure projects is attracting a large influx of expatriates, with population growing by 10 per cent in the first quarter of 2015 over a year earlier,” QNB’s report added.

This is stimulating growth in the financial services market, which grew by 9.8 per cent during the year, as well as the hotels and restaurant sector, which was up 9.3 per cent.

Meanwhile, the diversification of its hydrocarbons industry into higher-value products helped to boost the manufacturing sector by 9 per cent.

“Overall, we expect the diversification drive to continue and for the non-hydrocarbon sector to increase its share of GDP,” QNB said. “Low inflation, healthy fiscal balances and significant current account surpluses should provide a conducive macroeconomic environment for the growth momentum to continue gathering steam.”

Qatar is pressing ahead with its construction schedule ahead of the Fifa 2022 World Cup despite calls from a number of bodies, including the Council of Europe, for a re-vote on the country’s right to host the tournament. In May seven senior Fifa officials were arrested by Swiss authorities on behalf of the United States, which is seeking their extradition on conspiracy and corruption charges relating to the award of the World Cup. The Swiss Office of the Attorney General added that it had opened a case in connection with the award of both the 2018, given to Russia, and the 2022 World Cups.

Last week, Qatar’s supreme committee for delivery and legacy awarded a €770 million (Dh3.15 billion) contract to build the Al Bayt stadium in the city of Al Khor to the Italian contractor Salini Impregilo.

Moreover, infrastructure work continues unabated.

In May, Qatar’s Public Works Authority, Ashghal, awarded 11 contracts worth 6.06bn Qatari riyals (Dh6.1bn) on the Inner Doha Resewerage Implementation Strategy – a new trunk sewer network for the south of Doha – as well as local road and infrastructure improvements to a mix of Qatari-only contractors and to joint ventures with international construction firms.

On Saturday, Ashghal also signed a deal with Qatar Primary Materials Company (QPMC) that will provide 51 million tonnes of gabbro and 41 million tons of limestone at a guaranteed price over a period of five years. The contract guarantees the supply of materials for the contractors working on Ashghal’s programmes.

“The purpose of signing this agreement with Ashghal is to provide it with construction materials needed for its upcoming projects for the next five years,” QPMC’s chairman Abdulaziz Al Ansari said. “Ashghal is considered a strategic partner for QPMC, and this cooperation will surely enhance projects in the pipeline.”

Follow The National’s Business section on Twitter


Share This Post