Qatar's economy expected to grow at 9 pc

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DUBAI, Mar 7 (PTI): Qatar's economy is expected to grow at about 9 per cent in real terms in 2009, reflecting capacity expansions in the liquefied natural gas (LNG) sector, a Capital Intelligence report has said.

"The threat posed by the global economic downturn to Qatar is low with 'AA-' (AA minus) sovereign rating and the long-term outlook for sovereign creditworthiness remains stable," it said.

Capital Intelligence believes Qatar's sovereign ratings are supported by the strength and flexibility of the government's balance sheet and the country's external finances, which in turn are underpinned by the sheer scale of hydrocarbon production relative to the small size of the population.

Sharply lower oil prices will, however, contribute to a moderate contraction in nominal GDP and activity in non-oil sectors is likely to slow significantly in response to tighter financial conditions and the downturn in the global economy.

Inflation is expected to return to single digit but will probably remain comparatively high at around 8 per cent. The public finances are expected to remain strong, notwithstanding the oil price shock.

Assuming an average oil price of USD 40 a barrel and broadly unchanged policies, Capital Intelligence expects the central government budget to remain in surplus in the fiscal year ending in March 2010, although the magnitude of the surplus is projected to decline from about 14 per cent of GDP in 2008-09 to around 3 per cent.