Qatar avoided recession in 2008-09, and the economy surged ahead in 2010 because of the global recovery and the domestic boost provided by a near doubling of LNG production. The final LNG "super-train" (with a capacity of 7.8m t/y) is set to come on stream by the end of the first quarter of 2011. Concerns have been growing about the combined impact on the economy of a global slump in demand for LNG, particularly in the US, and the coming on stream of new LNG capacity in Qatar and further afield. The next two years will be difficult, but Qatar's dominant position in the market and low production costs should enable it to maintain export volumes, although profit margins will be squeezed and it will increasingly rely on the spot market. Although crude production capacity will rise by about 25% over the forecast period-largely owing to expansion at the Al Shaheen oilfield-production will remain constrained by OPEC quotas. A further boost to growth in 2011 will be provided by the commissioning of the first 70,000-barrel/day train in the Pearl GTL (gas-to-liquids) project, which is operated by Royal Dutch Shell, the Anglo-Dutch energy giant.

The government is expected to maintain high levels of capital spending on education, health and transport. Population growth is projected to remain strong over the forecast period owing to immigration, although at an annual average of almost 6% it will be well down from its peak of 17.9% in 2007. This in turn will support domestic demand. Growth will benefit from high levels of investment in the hydrocarbons sector but will be dampened by imports needed to develop Qatar's energy facilities and upgrade its infrastructure. Overall, we estimate that real GDP growth surged to 14% in 2010. We expect growth to remain very high, at 15.8%, in 2011 as the final LNG super-train comes on stream, before dropping considerably to an average of 5.3% a year in 2012-15, once the current round of investment in the country's gas export capacity has been completed.

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