Qatar: Industrial output growth eases in February
Industrial output expanded 0.4% year on year in February, which was a deterioration from January’s 4.8% increase. Looking at the details of the release, manufacturing production—totaling roughly 15% of all industrial production—decreased at a more moderate pace in February. Meanwhile, energy output—making up approximately 80% of industrial production—increased at a softer pace.
The trend pointed down, with the annual average growth of industrial production coming in at 1.5%, down from January’s 2.4% reading.
Our panelists expect the gross domestic product of the industrial sector to expand more sharply in 2024 than in 2023, buoyed by the government’s infrastructure push. Oil and liquified natural gas (LNG) output is likely to remain roughly stable. From 2025, the industrial sector should gain further steam as LNG output accelerates, culminating in the opening of the North Field expansion project in 2026; the government plans to raise LNG output by roughly 85% from current levels by 2030. The cancellation or delay of expansion projects in response to low natural gas prices poses a downside risk.
Analysts at Goldman Sachs said:
“While it may seem counterintuitive for Qatar to announce further export capacity expansions in a (soon to be) oversupplied market, we believe the region, which is the lowest-cost LNG supplier in the world, can benefit from increased long-term market share while conveying the image of a reliable supplier, especially in light of the recently announced pause in US LNG export project approvals.”
EIU analysts concurred:
“Qatar is betting on long-term demand in Asian markets, where coal substitution and strong population growth is expected to translate into incremental demand growth over the coming decades. Although concerns about a glut are increasing, QatarEnergy’s low production costs will help it to withstand any future oversupply pushing down prices.”