Our outlook for Qatar continues to be broadly positive, particularly as the country remains an oasis of stability in an increasingly volatile region. The main factor behind this strong outlook continues to be the country's enviable economic growth. Our optimistic view for Qatar's growth potential is underpinned by the country's ambitious projects in the energy sector and the private non-hydrocarbon economy. While oil and gas exports will continue to be the main driver of the economy's outperformance relative to its regional counterparts, the government's focus is slowly shifting to large investments in the private sector, particularly infrastructure. We forecast economic growth to continue at an impressive pace over the coming years and pencil in real GDP growth to come in at 17.2% year-on-year (y-o-y) in 2011 (up from an estimated 15.9% in 2010), and easing through the remainder of our forecast period to average 8.7% over 2012-2015. Such a strong outlook has very positive implications for the country's food and drink sector, with premiumisation likely to increasingly take hold.
Headline Industry Data
- 2010 food consumption growth = -1.74%; forecast to 2015 = +40.6%.
- 2010 soft drinks value sales = +19.9%; forecast to 2015 = +60.6%.
- 2010 mass grocery retail sales = +17.6%; forecast to 2015 = +50.8%.
- 2010 hypermarket sales = +17.7%; forecast to 2015 = +44.7%.
Key Company Trends
Looking to development domestic agriculture: According to press reports from February 2011, Qatar is looking into the latest technology as a means of making its barren land arable to deal with its high dependency on food and drink imports. The 17-member National Food Security Programme (NFSP) committee has created a five-stage plan that will identify challenges, conduct surveys and analyse data related to exploiting the most modern agricultural methods to render the currently unused land between Doha and Al Khor arable. No doubt the project will face many challenges, particularly the lack of freshwater resources and the harsh and arid desert climate. Nevertheless, the government appears committed to investing huge sums of money in research, development and technology in order to secure lower food prices.
Multinationals losing interest? In January 2011, French food retailer Auchan left the Dubai market after just two years. This move suggests that from the point of view of some of the leading Western retailers, the Gulf region dynamic on a per capita income basis arguably does not provide sufficient scale compared to other emerging retail regions. Even though Dubai is still without question the region's highincome hotspot and most in tune with Western consumer habits, consumers are not spending as freely as they were before Auchan entered the market. To make the Middle East region an important part of its emerging markets business, Auchan would probably have had to start a joint venture with a local operator in order to adequately grow its scale, something that it did not do.
Risks To Outlook
Potential fluctuations in hydrocarbon prices: The main threat for Qatar remains the fluctuations of global oil prices. Despite the government's efforts to diversify its economy away from the energy sector, non-hydrocarbon sector growth would still not be sufficient to sustain the entire economy should oil prices collapse. Another major risk comes from the ongoing social and political upheaval in the region. Qatar's short-term political risk profile remains robust. Nevertheless, Qatar is as authoritarian as most other states in the Gulf and, as we have seen so far in 2011, this can fuel tensions even in the least expected countries.