Boston, MA -- (ReleaseWire) -- 04/15/2014 -- With our new subsector forecasts, it is ever more clear that Qatar's construction sector is performing well. We have increased our real growth estimations for 2013 and our medium-term forecasts. In 2014, we now forecast the industry will grow in real terms by 11.8% year-on-year, as the transport projects such as the Doha Metro and New Port Project take off. Over the longer term we expect the driver of growth to increasingly be the residential and non-residential sector, which will be able to leverage off improved infrastructure to cater for increased demand from a growing population and increased arrivals for the 2022 FIFA World Cup. However, the market has been under pressure on a number of fronts, with rising price inflation caused by materials shortages and worker safety featuring in the world's media. Constraints in the market are likely to decrease profit margins, owing to continuously rising construction costs.
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Qatar remains one of our favourite construction markets in the GCC, buoyed by huge government investment and growing consumer demand. This is a product of strong economic growth in the country owing to its vast natural gas reserves and increasingly diverse economy. BMI's Country Risk team believes Qatari economic activity will continue to expand at a strong pace throughout 2014, driven primarily by growth in the non-oil sector. Robust private consumption on the back of a fast-growing population, large government spending commitments, and continued progress on infrastructure projects by public enterprises will support growth over the coming quarters. Fiscal policy is set to remain strongly supportive of the economy. The government has signalled its intention to ratchet up current spending and investment expenditure over FY2013/14 (fiscal year running from April to March).
In line with the expectation for robust economic performance, we have increased our forecasts for 2014 and the medium-term time horizon.
New for this quarter, our infrastructure sub-sectors forecasts:
- We forecast that across the transport sector real growth will reach 6.9% year-on-year (y-o-y) in 2014, and average 4.7% up to the end of our forecast period in 2023.
- In 2014 the energy and utilities sector will grow in real terms by 5.5% year-on-year and over the 2014-2018 period will average 4.5%. After 2018, we highlight the Qatar's power and water needs will be largely met and as such real growth in the industry is set to drop. However, renewables projects and extensions to the transmission network will continue to provide value - although not on the scale we are currently seeing.
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