Qatar: PMI points to strong non-oil growth

We expect Qatar’s economy to grow 5.1% in 2022 on the back of stronger hydrocarbon and non-hydrocarbon sector growth. In the LNG sector, investment in the North Field Expansion Project will underpin hydrocarbon sector GDP growth over the medium term. 

Meanwhile, PMI data continue to point to strong non-oil & gas growth in Q1 2022, with the headline PMI averaging 60.2. This reflects a sharp expansion in business activity as well as new work in February and March, after a slight dip in January.  We expect this to continue as the country prepares to host the Fifa world cup in Q4 2022.

Qatar: Preparations for Fifa world cup drive non-oil sector rebound

Source: S&P Global, Emirates NBD Research

The survey data also show little evidence of inflationary pressure with input costs rising at a slower rate than in Q4 2021, and selling prices declining in February and March 2022.

Official CPI data show inflation averaging 4.2% y/y in Q1 2022, down from 5.5% in Q4 2021. Food inflation has moderated over February and March, and while housing & utilities costs have increased m/m, the annual rate of inflation in this component is modest. The main source of consumer inflation in Qatar appears to be recreation & culture, which is up 38% y/y, followed by miscellaneous goods & services.

With a sizeable budget surplus expected this year, Qatar has the fiscal room to limit the pass-through of higher global food and fuel prices to consumers. Petrol prices have remained unchanged in Qatar this year and transport CPI inflation slowed to 1.6% y/y in March 2022 from 4.9% in February. We expect headline inflation to average 3.5% in 2022, up from 2.3% in 2021.