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Shady Elborno - Head of Macro Strategy
Published Date: 13 October 2021
As of early October, Qatar has begun transitioning into the last phase of lifting remaining Covid-19 related restrictions. Qatar moved through the first three phases of its reopening as planned, transitioning every three weeks. The first phase started on 28 May, the second on 18 June and the third on 9 July. Workplaces are now allowed to have 100% of employees working onsite. The fourth phase was initially scheduled to start on 30 July, but the transition was delayed as Qatar's daily Covid-19 cases rose to an average of 210 in August, up from 135 in July. The current transition comes after September data showed improving conditions with daily cases falling to 130.
Qatar's economy grew 4.0% y/y in Q2 2021, according to official preliminary estimates. Measured quarterly however GDP contracted by -0.3% q/q. Mining and quarrying expanded 0.7% y/y in Q2, while non-hydrocarbon activities posted a 6.2% y/y growth for that quarter. Accommodation and food service activities saw the biggest rise, climbing 41% y/y, largely due to the low base last year due to coronavirus-related restrictions. Transportation and storage activities grew 26.9% y/y, while manufacturing grew 13.4% y/y. Wholesale and retail trade GDP grew 26.1% y/y.
PMI survey data point to a solid recovery in the non-oil private sector in Q3 2021, with the headline PMI hitting an all-time high of 60.6 in Sept. The September reading of 58.2 was the highest since the series began in 2017, beating the previous record of 59.8 in July 2020. Output and new work and purchasing activity all gained momentum in Q3, while a sharp rise in employment did not prevent backlogs from accumulating. On a quarterly basis the PMI averaged 58.2 in Q3, beating the previous quarterly peak of 56.2 in Q3 2020. New business and total business activity both accelerated for 4 consecutive months into September. The rate of job creation was the fastest in 3 months and among the strongest recorded by the survey to date.
This year we expect non-oil sectors to expand 4.0% as the country prepares to host the 2022 FIFA World Cup, and as activity and travel continue to normalize in H2 2021. We forecast headline GDP at 2.5% in 2021, rising to 4.5% in 2022.
Source: IHS Markit, Emirates NBD Research
Qatar finance ministry in August said the country posted an estimated surplus of almost USD 1bn in Q2 21 on the back of higher than budgeted oil and gas prices. We expect the budget surplus to widen in Q2, and likely exceeding 7% of GDP in 2021.
Qataris voted in early October in the Gulf Arab state's first legislative elections for two-thirds of the advisory Shura Council. Turnout for the election of 30 members of the 45-seat body was 63.5%, according to official estimates. Qatar’s Emir Sheikh Tamim bin Hamad Al Thani will appoint the remaining 15 Council members. The Council will have legislative authority and approve general state policies and the budget, but has no say in the setting of defense, security, economic and investment policy.
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