Qatar’s economy is likely to grow 6.3 per cent this year, much faster than previously expected and well ahead of other oil exporting Gulf states, helped by robust domestic demand, a report showed on Tuesday.
Gross domestic product growth in the world’s top exporter of liquefied natural gas is forecast to hit 7.8 per cent in 2015, its fastest rate since 2011, said the report of Qatar’s ministry of development planning and statistics. It was 6.5 per cent in 2013.
“Although receding hydrocarbon output is seen checking overall growth in 2014, with the commissioning of the Barzan gas project in 2015 a step increase in gas output is expected, taking aggregate growth higher,” the ministry said.
Qatar had previously forecast 2014 growth of 4.6 per cent, citing reduced output from maturing oil fields.
The Opec member's fiscal surplus is forecast to narrow to 9.3 per cent of GDP in calendar 2014 and to 5.5 per cent in 2015 from an estimated 12.9 per cent in 2013, as the government's large investment programme gathers pace ahead of hosting the 2022 Fifa World Cup football tournament.
In the 2013-2014 fiscal year, which ended in March, the government’s overall surplus was estimated at 94.6 billion Qatari riyals, equivalent to 12.6 per cent of GDP and up from 11.2 per cent in the previous year, the report said.
“Most of the increase came from the transfer of QP’s (Qatar Petroleum) entire financial surplus to the government,” it said.
Qatar Petroleum started transferring its entire financial surplus to the government from 2013. Previously, a part went to the government as investment income, part was retained on the company's balance sheet and another was used to provide fresh capital to the Qatar Investment Authority.The price of oil Qatar needs to balance its budget is forecast to rise to US$52.90 a barrel in 2014 and $67.70 in 2015 from $42.30 last year under the baseline scenario, the ministry said, below current levels of $114 for the Brent crude.
Total budget spending fell 1 per cent in 2013-2014, the first decline in a decade, as a 2.4 per cent rise in capital spending was outweighed by a 2.1 per cent drop in the current expenditure.
Qatar, which pegs its riyal currency to the US dollar, plans to spend some $210bn on infrastructure, including roads and stadiums ahead of the World Cup.
Inflation is expected to average 3.0 per cent in 2014, less than 3.5 per cent seen in December, and edge up to 3.4 per cent in 2015 with strengthening domestic demand.
“Risks of accelerating inflation seem contained at the moment, but consumer price pressures would pick up if imported inflation gathered pace,” the report said.
Analysts polled by Reuters in April forecast Qatar’s GDP would grow 6.1 per cent in 2014 and 6.0 per cent in 2015, and inflation would reach 3.6 per cent and 4.0 per cent, respectively.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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If you go:
Getting there:
Flying to Guyana requires first reaching New York with either Emirates or Etihad, then connecting with JetBlue or Caribbean Air at JFK airport. Prices start from around Dh7,000.
Getting around:
Wildlife Worldwide offers a range of Guyana itineraries, such as its small group tour, the 15-day ‘Ultimate Guyana Nature Experience’ which features Georgetown, the Iwokrama Rainforest (one of the world’s four remaining pristine tropical rainforests left in the world), the Amerindian village of Surama and the Rupununi Savannah, known for its giant anteaters and river otters; wildlifeworldwide.com
What it means to be a conservationist
Who is Enric Sala?
Enric Sala is an expert on marine conservation and is currently the National Geographic Society's Explorer-in-Residence. His love of the sea started with his childhood in Spain, inspired by the example of the legendary diver Jacques Cousteau. He has been a university professor of Oceanography in the US, as well as working at the Spanish National Council for Scientific Research and is a member of the World Economic Forum’s Global Future Council on Biodiversity and the Bio-Economy. He has dedicated his life to protecting life in the oceans. Enric describes himself as a flexitarian who only eats meat occasionally.
What is biodiversity?
According to the United Nations Environment Programme, all life on earth – including in its forests and oceans – forms a “rich tapestry of interconnecting and interdependent forces”. Biodiversity on earth today is the product of four billion years of evolution and consists of many millions of distinct biological species. The term ‘biodiversity’ is relatively new, popularised since the 1980s and coinciding with an understanding of the growing threats to the natural world including habitat loss, pollution and climate change. The loss of biodiversity itself is dangerous because it contributes to clean, consistent water flows, food security, protection from floods and storms and a stable climate. The natural world can be an ally in combating global climate change but to do so it must be protected. Nations are working to achieve this, including setting targets to be reached by 2020 for the protection of the natural state of 17 per cent of the land and 10 per cent of the oceans. However, these are well short of what is needed, according to experts, with half the land needed to be in a natural state to help avert disaster.
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The biog
Favourite hobby: taking his rescue dog, Sally, for long walks.
Favourite book: anything by Stephen King, although he said the films rarely match the quality of the books
Favourite film: The Shawshank Redemption stands out as his favourite movie, a classic King novella
Favourite music: “I have a wide and varied music taste, so it would be unfair to pick a single song from blues to rock as a favourite"
Bangladesh tour of Pakistan
January 24 – First T20, Lahore
January 25 – Second T20, Lahore
January 27 – Third T20, Lahore
February 7-11 – First Test, Rawalpindi
April 3 – One-off ODI, Karachi
April 5-9 – Second Test, Karachi